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QUESTION:
We have 80 acres with two dwellings that we are looking to sell without =
extensive tax cost. We have been residing in Colorado for 7 years. =
What is the most efficient way to sell? We've heard the taxes will =
include 25% of the sale. Is this true and can you help? Thank you for =
your response.
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david ingram replies;
Yes, I / we can help. You will need to fill out forms T2062 and T2062A =
to show the actual profit on the sale.
Your first tax liability is to Canada if the property is in Canada. You =
will calculate and pay tax to Canada on a T1 return with Schedule 3 =
filed to report the Capital gain. The purchaser will withhold 25% of the =
GROSS sales price unless you get a Form T2062 approved for reduced =
withholding.
http://www.ccra-adrc.gc.ca/E/pbg/tf/t2062/t2062-01e.pdf
If the property was a rented property, you also need to file a T2062A =
with the T2062.
http://www.ccra-adrc.gc.ca/E/pbg/tf/t2062a/t2062a-01e.pdf
If the property was rented, you should have been filing Canadian returns =
under Section 216(4) Form T1 plus T776) to report the rental income to =
Canada and Schedule E to report the income to the US on your 1040 EVEN =
IF IT WAS LOSING MONEY.
After paying the tax to Canada, you will calculate the gain again for US =
purposes and if there is a calculated tax (schedule D), you will claim a =
foreign tax credit for the tax paid to Canada on US form 1116.
Please note, that if they were rented, You will also have to repay the =
tax on any CCA (Capital Cost Allowance or depreciation) you have claimed =
against the rental income.=20
Depending upon the profit, you can expect to pay a Canadian Tax of 11 to =
23% of the profit with 11% up to $60,000 of profit, three more rates up =
to $200,000 and 23% on any profit over $200,000 Canadian in one =
person's name. The rate has minor variations form province to province =
as well.
If you do not send in the T2062 and T2062A forms (which are suddenly =
taking longer to process for some reaon or other), the purchaser must =
withhold 25% of the gross sale price. You will get a refund then when =
you file the tax returns.
When filling in the T2062, real estate commissi9ons may not be used in =
the calculation but can be when the actual return is filed so there is =
always an incentive to file the return.
And yes, we can look after the Canadian, Provincial, US Federal and =
Colorado returns for you.
. =
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=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D
Answers to this and other similar questions can be obtained free on Air =
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Cartier =
Partners and I will be hosting an INFOMERCIAL but LIVE talk show called =
"ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the =
internet at
www.600AM.com=20
Local phone calls to (604) 280-0600 - Long distance calls to =
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Old shows are archived at the site.
This from ask an income tax immigration planning and bankruptcy expert =
consultant guru or preparer from www.centa.com or www.jurock.com or =
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wizard - David Ingram's US/Canada Services
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Disclaimer: This question has been answered without detailed =
information or consultation and is to be regarded only as general =
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in any particular circumstances. No contract exists between the reader & =
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All readers should obtain formal advice from a competent financial, or =
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