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An Oakville Beaver Advertising Feature|}#" 1 am pleased to advise all my clients and colleagues that I have joined Norlite Financial Services. As a Mortgage Consultant, the professional and knowledgeable service you have come to rely on will be enhanced as the products 1 look forward to providing the best financing options rates of numerous Financial Institutions will be available to me. I can still be reached 7 days a week at pager #416â€"200â€"6656, or by fax #905â€"639â€"0653. to suit your _ NORLITE particular needs. _ Financal Services id. Laurie Furness -jmal Glen Blvd Glenashton Blvd. Snowbirds face new U.S. tax laws BY HARRY ULRIG Special to the Beaver he U.S. Internal Revenue TService has become increasâ€" ingly concerned that the U.S. tax system is being abused by nonâ€" residents. Due to this concern, greatly increased filing requireâ€" ments have been introduced. It is unclear whether this enlarged net was supposed to catch Canadians "snowbirds", but the fact is that it has. Loans * Lines of Credit *1st, 2nd 3rd mortgages *Residential Commercial *Plazas/Apt./Office Bldgs. *Up to 95% Financing *NO Upâ€"Front Fees *Inâ€"Home or Office Consultation *6 Days, 9 a.m.â€"9 p.m. In the rear, a private patio courtyard forms a natural retreat, nestled between the breakfast room, sunken family room, conservatory room and the attached rear garage. ."- e w id , ET mai L El If you‘re a snowbird who vacaâ€" tions 122 days or more each year in the U.S., you are likely subject to the new filing requirements. Also, if you own a vacation property, there are some important U.S. tax rules you should know about. If you spent 183 days or more in the U.S. during 1993, you‘re deemed to be a U.S. resident under their domestic law. You can also be a resident for 1993 under domestic law under a weighted average of the number of days spent in the U.S. in the last three years. The weighted average is: 1 x No. of days in 1993; plus 1/3 x No. of days in 1992; plus 1/6 x No. of days in 1991. If the total of this formula is 183 or more and you spent more than 30 days in the U.S. in 1993, you‘re a resident under domestic law. If you‘re resident due to the weighted average test described, you can claim a "closer connection exemption". This exemption is claimed by filing a statement of reasons why you‘re more closely connected with Canada. You would want to point out that your principal place of residence is in Canada; you Mon.â€"Th have family in Canada; you vote in Canada; and your investments, bank accounts, and other personal ties are with Canada. You should also disclose the number of days spent in the U.S. during 1991, 1992, and 1993. If you were actualâ€" ly present in the U.S. for 183 days or more in 1993 or you hold a green card, you can‘t use this exemption. The term "domestic law" has been used, thus far, since there is an additional remedy to U.S. residency for Canadians. Canada and the U.S. have entered into a tax treaty. Under this treaty, there are tieâ€" breaking provisions, so that you‘re only resident in one country. Essentially, you‘re resident in the country in which you have the most family and residential ties. Treaty tieâ€"breakers Unfortunately, the treaty tieâ€" breakers do not apply automatically in the U.S. You must file a tax return with the IRS, form 1040NR to get it. On this form, you would report U.S. source income such as interest and dividends. You would also report the withholding tax on these amounts. Finally, you would attach a statement to the return statâ€" ing that you‘re not subject to reguâ€" lar income tax on these amounts. If you actually own your place in the sun, there are further requireâ€" ments. If you receive rental income from the property, under U.S. law, 30% of gross rental payments must be remitted to the IRS as withholdâ€" ing tax. You may be thinking that this seems harsh. Fortunately, there is an alternate, elective process you can follow. If you so elect, you can be taxed on rental income on a net income basis. By doing this, you can report the gross rental income, deduct rental expenses, and be taxed on the difference at U.S. personal tax rates. Keep in mind that you must file a return to make the election. Unlike Canada, you can‘t ignore filing the return because you know you‘re not taxable. Without a return, you owe 30% of gross rents. Even if you don‘t rent out your vacation property, there are still U.S. tax implications for you. Property situated in the U.S., including real property, is subject to U.S. estate taxes when you die. Harry Uhrig, C.A. is a partner in the Oakville office of BDO Dunwoody Ward Mallette.