Canadians Selling/Renting Tax Implications

[Bobby2443]

Curious if any Canadians that have experience selling/renting points have had any issues with the CRA and tax implications? I own two contracts at beach club (pending a third at VGF) and when I bought the contracts I didn’t have to fill out or sign anything for the IRS that would be passed along to the CRA, but I had read somewhere that if renting points through a broker they will ask you to fill in a form that would eventually make its way to the CRA so they know the rental income you’ve collected. Is this the case? Does the same thing happen when you sell a contract? I’m interested in buying a 4th contract but I’d like the certainty of knowing if I need to rent the points I can do so without our friends at the CRA being involved .. or does that only apply if you go through specific brokers

Thanks

 

[CarolMN]

Respectfully, you are asking if you don't report the rental income, will you get caught. Either way, you owe the tax.

Purchases are not a taxable (reportable) event in the US, although sales are. I suspect it is the same in Canada, so the CRA probably doesn't care that you bought a timeshare in the US.

Rental Brokers located in the US must issue 1099s (to show taxable income) to individuals located in the US. Brokers in the Canada are not required to issue 1099s to individuals who pay taxes in the US. However, I suspect, David's and other Canadian brokers are obligated to report rental income for residents of Canada.

Individuals in the US are supposed to "self-report" their rental income even if no 1099 is issued. I have no idea how many actually do or how many who don't get caught or what the penalty may be for tax cheating . Again, Canada probably has similar tax laws.

 

[JETSDAD]

When you sell a contract 15% will be withheld for FIRPTA. If you want to claim any of that back you would need to obtain an ITIN and file for the tax return in the US. Any gain would have to be reported in Canada but the taxes paid in the US would be a credit here so you're not paying twice. I'm not an accountant and haven't sold a contract so take that for what it's worth (I've just been reading about it recently).

 

[brolyat920]

I have sold and rented out points. When renting I have never had to fill any paperwork out. When selling Jetsdad is correct. They withhold 15% and you need to file tax return in US to get it back. If you sell, I would pay the representative to do that work for you. I have done it myself and it was a big pain. Well worth the money and faster to get them to do it for you. As long as you don't make money on the resale you don't have to pay in Canada. Try to break about even if you can. Hope that helps!