I can’t tell you the number of times my husband Dave has gone shopping only to come home with something he didn’t really need, or worse, something that didn’t quite fit but he bought it anyway just because it was on sale!!He’ll buy a pair of pants that are a little too short or a little too tight just because they are 50% off. Or he will buy a jacket with a collar that has one side sticking up and one side laying flat just because it’s a clearance item.

And in the end, he never even wears these things because they don’t quite fit him!

And as silly as it sounds to buy something you’ll never use just because it’s on sale, it’s what some Canadians seem to be doing these days as they rush down the the US and buy property. With the Canadian dollar so strong, our economy holding steady, and the house prices in the US so much lower than they’ve been in years, many Canadians think their favourite destinations like Palm Springs, Phoenix, and various places in Florida are experiencing the biggest sale EVER. And they rush down in a frenzy to buy a place…. or in some cases they don’t even rush down they buy without ever seeing what they are picking up!!

If you’re considering buying property in the US then there are some things you should consider carefully:

• Will this be an investment or a lifestyle property? The answer to this will make a big difference in where you buy as well as potentially how you hold the property. You’ll also want to make sure you get tax planning advice because you could be subject to taxation in 2 countries if you haven’t set everything up right for an investment property.
• Where do you want to hold the property? Be sure to consider the ease of access from your Canadian home as well as the other things you’re looking for.
• How the property will be held.
• How will you finance the property? (most people get financing in Canada to pay cash for their property in the US but there are financing programs available to Canadians in the US if you put a large amount of money down on the property).
• How much time you plan to spend in the US. This is similar to whether it’s going to be a lifestyle property or an investment property. Does owning a place in the US mean you will only vacation in the US? If you have big dreams of an African Safari or Paris in the springtime then you have to consider that.

Ultimately, I think you should treat this purchase like you would any other real estate investment. Start with your goals. Complete good market research to identify where you want to buy. Begin building the team you’ll need to buy in that area as you search for properties, and then buy your property. To do this properly, I believe, you will have to visit the area you choose to buy in several times and see a lot of properties in those visits.

Then… besides following that process and devoting time and effort to the market research, I believe the next biggest thing you need to take care of is understanding the tax implications of what you buy. And you’ll want to set yourself up in a way that allows you to minimize the tax burden.

There is a lot to consider when buying an investment property…. especially when you’re looking to do it in another country. If you are a Canadian looking to buy in the US then you should definitely pick up a copy of Philip McKernan’s book South of 49. It will walk you through the essential things you need to know! And the proceeds from the sale of the book are all being donated to help children in Sri Lanka! You’ll help yourself from feeling like you’ve just bought a property for no other reason than it’s on sale… and you’ll be helping children in another country!

Article Source: http://EzineArticles.com/?expert=Julie_A_Broad

A large number of my clients asks me about what forms of tax savings can life insurance policies provide. What I keep telling them that while life insurance is a major tool for these purposes, there are other ways in which a Canadian individual can save and optimize long-term financial planning

1. Loans to family members – you have the option of lending money to your family in a low tax bracket for the purposes of investments. What you need to keep in mind to charge an interest at the CRA prescribed rate (5 percent at the time of writing) – as long as you will keep this rate there will be no attribution back to you on the earned income. The outcome depends on the yield of the investment, under certain conditions a rather big tax saving is possible.

2. Invest inheritance in separate names – a spouse with a lower income who receives an inheritance should be investing it in a separate account, so any investment return is taxed solely in the lower income spouse’s hands. Investing it in joint accounts would result in higher taxing.

3. Spousal RRSP contributions – a higher income-earning spouse should contribute to a spousal RRSP in the name of the spouse with a lower income (the annuitant), with the goal of having both RRSPs equal in contribution amounts. The spouse with the higher income has the option to use the RRSP deduction now to reduce income taxes, while the lower tax bracket spouse will pay income tax on the RRSP withdrawals in the future.

4. RESP Contributions – This is a good way to post-secondary education savings for your children and achieving income-splitting at the same time. The contributions are not deductible to you, but the investment grows tax-free – the future withdrawals are taxed as income to the student at a time when he presumably has only a minimal income (i.e., in a low tax bracket). As a result of this, the income tax paid is very low.

5. Donate – consider making a donation to publicly-traded securities with accrued capital gains to a registered charitable organization instead of donating cash. No tax is payable on the capital gains which haven’t been realized yet by donating listed shares to a charitable organization. Under these circumstances, the charity receives a larger amount than it would have if you were to have first sold the shares and then donated the proceeds after paying taxes on the capital gain. You will receive a donation tax receipt, and hence a tax credit, for the full market value of the shares, while paying no capital gains tax on this disposition.

6. Employing your spouse and children – if you own a business (either incorporated or as a sole proprietor), consider paying a salary to your spouse and children. Note that the salary must be reasonable and in line with the services they perform. CPP contributions are not required for children under the age of 18. EI deductions should be discussed with your tax adviser. Minors, even with no taxable income for the year, should still file tax returns in order to build up RRSP contribution room based on their salary. These can be used for future income tax deductions.

7. Interest deductibility – interest paid on a home mortgage and car loans are not deductible under standard circumstance, while interest on loans used to earn business or investment income is. Therefore, try to ensure that all loans you take out are for a purpose which allows deduction. For example, if you have excess funds that you would like to invest, pay off your mortgage first, and only take out a loan for investment purposes later.

In every scenario, it’s very important to consult with your professional tax adviser to avoid complications and ensure income tax law adherence. For more information and other tips, refer to my website.

Article Source: http://EzineArticles.com/?expert=Lorne_S._Marr

The STTB will be paid to eligible Ontario tax filers in three tax-free instalments in June 2010,
December 2010 and June 2011. The maximum benefit amount is $300 for single people and
$1,000 for families (including single parents).

The benefit payments to single people will be reduced if their adjusted net income is greater than
$80,000. The benefit payments to families will be reduced if their adjusted family net income is
greater than $160,000. The reduction will be equal to 5% of the income amount that is greater
than the threshold amounts. For example, a single person with adjusted net income of $81,000
would receive three benefit payments of $50 each. Single people with income over $82,000
would not receive a benefit.

The table below shows the maximum benefits and the income ranges over which the benefit is phased-out.

To qualify for the STTB, you are required to file a 2009 income tax return for the June 2010 and
December 2010 payments, and a 2010 return for the June 2011 payment. If both you and your
spouse or common-law partner file a tax return, the benefit payments will be made to the
individual whose return is assessed by the CRA first.

This TAX TIP deals with a wide variety of issues and the information is general in nature. As each person’s circumstances are unique, readers are urged to consult W&P prior to acting on the basis of material in this Tax Tip. If you have any questions regarding the content of this or any other Tax Tips, please contact the W&P Tax Group.

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