Canadian Living in US selling house in ? T2062 T2062A T1161 -

david ingram replies:

The 25% is the starting figure and is only a withholding tax.

If you left Canada and the house was worth $400,000 and you are selling it for $400,000, you can file forms T2062 and T2062A and have the withholding canceled.

If it was worth $400,000 and you are selling it for $500,000, by filing forms T2062 and T2062A, you can have the withholding reduced to $25,000 (25% of the $100,000).  When you filed your actual tax return at the end of the year, the actual tax on $100,000 profit would only be about $12,000 and you would get a $13,000 refund.

By canceling the sale or failing to proceed, the realtor has a legal right to claim a full Real estate commission from you and the buyer can sue you for non-performance and any losses they have sustained.  Those two situations are likely far more serious than the tax possibilities. 

You need to consult another real estate lawyer to understand your rights.

If no one told you about the forms T2062 and T2062A, you were not served properly.

If your lawyer did not explain form T2062A and T2062 to you , you need a different lawyer.

If it is a BC sale you could try Bill Spohn at (604) 926-8681 or David Stoller at (604) 922-4702 -- both understand non-resident sales.

You also should have filed form T1161 for the return for the year that you left Canada.

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these older questions might help.
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QUESTION:

Hello ! I am a Canadian citizen moved to USA in Jan.1.07. I am selling my house after 10 months(empty after I left).I still have bank a/c's and my wife is a Canadian PR. Will I have problems to sell my house in Chatham, Ontario. Please reply - 309-333-xxxx.

Regards
xxxxx xxxxxxxx 

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david ingram replies:

I see you sent this twice - sorry it was not answered but I do get 30 to 100 a day and can not even begin to answer them all.

This has been answered for other people however in the time between the two questions.

Because you are not living in Canada, anyone buying the house is required to withhold 25% of the GROSS sale price unless you fill in and file forms T2062 and T2062A with the CRA within ten days of the actual sale.

This form would take into account that the house was your personal residence up to the day you left.

For 2007, you must file form T1161 as a departing resident. Failure to file Form T1161, can end up with a $2,500 fine as shown below.  Happy to look after these departing Canada returns for you.


These similar questions were answered on Feb 17 for instance.

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Hi David,

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david ingram replies:

If you do not want to report your US income to Canada, you need to file a departing Canada return including form T1161.. If your house is rented out, you should have filed form NR6 BEFORE leaving the country.

Our fees are outlined in the Disclaimer below following some older questions.


QUESTION: Hi David, I am Canadian citizen, worked in Canada for the first 5 months of 2006. then moved to US and worked then for the rest of 2006. I have income from Canada employer, Canadian bank and US employer. I filed tax return on my US income to IRS already. I haven't done Canadian tax return yet. I had thought I only need to file canadian tax return on my canadian income. But it seems both CRA and IRS requested to report my world income to both. I am confused. What should I do to file the tax return to both? More specially, I received NR4 slip from CIBC bank. I could not find where to enter this form when I used Ufile.ca. How can I enter US W2 form into any Canadian tax form? How can I enter T4 slip into US tax return form? thanks a lot! _______________________________________________________________
david ingram replies:

An NR4 does not go on the Canadian return.  It goes on Schedules B and 1116 of the US return

The T4 does not go on the US return unless you are filing as a year round resident as in 2 below.

I am too busy to come up with a new answer but this older one will give you an idea.

QUESTION: Hi David, I really need your help in filling U.S tax and I am getting mixed messages which forms to file. I am a Canadian Citizen in U.S on TN visa for more than a year. I have RRSP in canada over 10,000 put in fixed bond and saving account in a bank. What do I need to file here and what forms do I need to fill. Do I still have to file tax in Canada for canadian earning? Please help. ____________________________________________________
david ingram replies;

You need to file a departing Canada tax return and file T1161 if you left more things than your RRSP behind.  The Canadian return will only include Canadian earnings although if you had a Home Buyers Plan, it is all due and taxable on the departing Canada return unless you have paid it back.

For the US, you have two choices:

1.   File a 1040NR dual status statement and a Dual Status 1040 Income Tax return with no standard deduction

or

2.   File a full 1040 which includes your Canadian income and gives you a full standard deduction and the right to file a joint return if married.  This is usually the best if you left Canada early in the year as you did.

If you can't figure it out, file an extension  form 4868 (find it at http://www.irs.gov/pub/irs-pdf/f4868.pdf )

and then send the information to us at the address in blue below to complete for you.
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david ingram replies:

The T1161 for a departing Canadian is due on April 30th of the year following the departure.  The penalty is a minimum of $100 or $25.00 per day to a maximum of $2,500.  This is the same penalty for the late filing of a T3 return with distributions.

I know of no method of officially canceling the $2,500 penalty you will each have received.  You could try writing to the FAIRNESS COMMITTEE and explain the situation and they might cancel it.  for $5,000, it is certainly worth the effort.

You can start looking up the rules for the FAIRNESS COMMITTEE here:

http://www.cra-arc.gc.ca/agency/fairness/prov_3-e.html

I do not expect them to agree but they might.

You might write to Prime Minister Stephen Harper as well.  The penalty is unfair because although easy to find if you know what you are looking for, NO ONE knows about it automatically. 

The tax preparation programs do not tell you to fill it in when you put a date in for departing Canada. 

The $2,500 penalty is imposed after 100 days.



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