My question is: Applicable to both US and Canada
QUESTION: My wife & I are Canadian citizens& will be seling a vacant lot in
Florida in the future.We obtained this lot thirty yrs ago & would like you
to unform us of any applicable taxes from either country.
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david ingram replies:
Back in 1967 / 68 I sold many hundreds of Florida Lots at Cape Coral to
Canadians. Every once in a while, someone comes along who bought one and I
was surprized to see that Cape Coral was rated as the number one retirement
spot in the USA several years ago although Sun City Arizona has taken over
now.
The answer is simple. When you sell it, you will each have to file a US
1040NR return to report the sale. If there is a profit, you will owe about
20% tax to the US. Your sale is subject to US Alternative Minimum Tax (US
form 6251) and most tax preparers you might approach in either country miss
this fact resulting in an unpleasant surprize for you several months later.
You will then have to convert the figures to Canadian and report the income
in Canada, but you will use different ACB figures than the US figures.
This is because the capital gains on the lot was NOT taxable in the US until
1985 because of a US Canada Tax Treaty exemption that you can take advantage
of.
Virtually NO US or Canadian preparers know about this either. In 40 years of
preparing tax returns in three provinces and 30 states, I have only ever
seen "one" US accountant invoke the treaty here. That was Roy Lentz, a CPA
in Bellingham, Washington. (credit is always given here where credit is
due). I also know from a conversation that Gary Gauvin, an IRS enrolled
agent in Rockwall / Garland Texas knows about the rule but then he used to
be my partner in an office in an office in Ottawa before he moved to the US.
I would be glad to look after your US / Canada tax returns when the time
comes up. Even though you live in Mississauga, we look after US returns
from 40 countries by mail, email, fax and courier.
Ask a cross-border International real estate rental mutual funds immigration
non-resident income tax expert - David Ingram 's CE-NTA Services in North
Vancouver BC Canada on It's Your Money CKBD AM600 Fred Snyder's Radio Show
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I do not know how far the LD line reaches.
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