US resident selling Canadian Property -
QUESTION: Hi David, My husband and I are US Citizens and are thinking of selling our summer home in Canada. I have researched online quiet a bit on the forms/paper work required, but I am unclear how the process/timing would go. Also, I have a tax question as well. Before we list with a Realtor, I am wondering how much time we should state in our listing agreement as to when the home could be closed on by a potiental buyer, that would allow us to file the T2062 and get the Certificate of Compliance. And is the T2062 typically filed after an offer is made or after the potential buyer has completed inspections, and loan approval? Or is this all done at the time of closing? If so who's attorney holds the tax money that would be sent for the Certificate of Compliance. We currently do not have an ITN number, should we file for that now or wait and do both forms together. (T1261 and T2062) From what I have read it looks like my husband and I both need to file each of the forms as both names are on the title of the house. Please correct me if I am mistaken. For my last question, we bought when the exchange rate was 1.535 in 1998 now it is 0.990. How is the gain in the exchange rate handled? Thank you in advance for your help. --------------------------------------------------------------------------- david ingram replies:
This is likely the last question I will answer until May. April 30th is our next tax deadline and i am way too far behind.
Depending upon where the house is located, the CRA is taking three months or more to issue the T2062 clearance certificate for the sale. The certificate must be applied for within 10 days of the completion to avoid a $25.00 per day fine.
The responsibility to withhold the money is that of the purchaser. Your attorney or their attorney will decide who holds it and it is my experience that the purchaser's attorney will simply give the money to the seller's attorney on their undertaking to hold it until the certificate has been issued.
You can file the T1261 anytime and likely the sooner the better. That way, your attorney will have a number to use when he or she sends in the T2062.
There is a fillable T1261 form at http://www.cra-arc.gc.ca/E/pbg/tf/t1261/t1261e-fill-06e.pdf. You should save a blank form to your computer first. Fill it out on your computer because it will not save 'with' the information from the government site.
The T2062 is not available in a fillable format but you can find it at: http://www.cra-arc.gc.ca/E/pbg/tf/t2062/t2062-08e.pdf
You should also fill out T2062A if there is a building on the property to break down the building and land portions -- land on T2062 - Building on t2062. http://www.cra-arc.gc.ca/E/pbg/tf/t2062a/t2062a-08e.pdf
For US purposes, you use the Dollar values at the time you bought and sold in US dollars. that means that you will be paying tax on the exchange value on your US return.
On April 6. 2008, David
Ingram wrote:
It is very unlikely that blind or unexpected email to me will be answered. I receive anywhere from 100 to 700 unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients. Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first. I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. e bankruptcy expert US Canada Canadian American Mexican Income Tax service and help
However, I regularly search for the words"PAYING
CUSTOMER" and always answer them first if they did not get spammed out.
For the last two weeks, I have just found out that my own email notes
to myself have been spammed out and as an example, as I wrote this on
Dec 25, 2007 since June 16th, my 'spammed out' box has
47,941 unread messages, my deleted box has 16645 I have actually looked
at and deleted and I have actually answered 1234 email questions for
clients and strangers without sending a bill. I have also put aside
847 messages that I am maybe going to try and answer because they look
interesting. -e bankruptcy expert US Canada Canadian American
Mexican Income Tax service and help
Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office) expert US Canada Canadian American Mexican Income Tax service help.
$1,700 would be for two people with income from two countries
Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable. In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years. We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund.
It is very unlikely that blind or unexpected email to me will be answered. I receive anywhere from 100 to 700 unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients. Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first. I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. e bankruptcy expert US Canada Canadian American Mexican Income Tax service and help
Therefore, if an email is not answered in 24 to
48 hours, it is likely lost in space.
You can try and resend it but if important AND YOU TRULY WANT OR NEED
AN ANSWER from 'me', you will have to phone to make an appointment.
Gillian Bryan generally accepts appointment requests for me between
10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los
Angeles) time at (604) 980-0321. david ingram expert
US Canada Canadian American Mexican Income Tax service and help.
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My Home office is at:
david ingram's US / Canada Services
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Cell (604) 657-8451 -
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Cell (604) 657-8451 -
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Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office) expert US Canada Canadian American Mexican Income Tax service help.
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This is not intended to be definitive
but in general I am quoting $900 to $3,000 for a dual country tax
return.
$900 would be one T4 slip one W2 slip
one or two interest slips and you lived in one country only (but were
filing both countries) - no self employment or rentals or capital gains
- you did not move into or out of the country in this year.
$1,200 would be the same with one
rental
$1,300 would be the same with one
business no rental
$1,300 would be the minimum with a
move in or out of the country. These are complicated because of the
back and forth foreign tax credits. - The IRS says a foreign tax credit
takes 1 hour and 53 minutes.
$1,600 would be the minimum with a
rental or two in the country you do not live in or a rental and a
business and foreign tax credits no move in or out
$1,700 would be for two people with income from two countries
$3,000 would be all of the above and
you moved in and out of the country.
This is just a guideline for US /
Canadian returns
We will still prepare Canadian only
(lives in Canada, no US connection period) with two or three slips and
no capital gains, etc. for $200.00 up.
With a Rental for $400, two or three
rentals for $550 to $700 (i.e. $150 per rental) First year Rental -
plus $250.
A Business for $400 - Rental and
business likely $550 to $700
And an American only (lives in the US
with no Canadian income or filing period) with about the same things in
the same range with a little bit more if there is a state return.
Moving in or out of the country or
part year earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the
first and $25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to
$100.00 each.
18 RRSPs would be $900.00 - (maybe
amalgamate a couple)
Capital gains *sales) are likely
$50.00 for the first and $20.00 each after that.
Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable. In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years. We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund.
This is a
guideline not etched in stone. If you do
your own TDF-90 forms, it is to your advantage. However, if we put them
in the first year, the computer carries them forward beautifully.
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