Hello,
Just found your website . Very informative reading on answers to
questions.
Recently sold USA cottage( owner since 1964) and have to deal with IRS
on cap gains. I am a Canadian. Been spending hours reading, studying,
ordering tons of forms, talking to IRS for info ( very rude and nasty
ignorant person ).
Agree with you completely that most do not know about critical aspects
of the law. I had to inform a H&R Block "tax experts "office in
Vermont about the tax treaty and 1985 value.Lady told me she had been
doing Canadian tax returns( on selling USA properties) and not taking
the 1985 value.
Also spoke to a " tax expert " in Ottawa ( Canada Revenue). They
objected to my use of a USA cottage as a principal residence. Told me
this was not allowed and she knew because she dealt with the "
difficult cases ". She checked into it, called me back to indicate I
was right, and told me I should go work for them.
How could they not know something so simple?
As bad as the Canadian tax system is, I think the USA system is worse.
Full of omissions, contradictions, etc.
No wonder some try to cheat on returns or don't bother filing.
I do not have lots of money so I try to do everything myself. I find
this challenging but always worry that I am shortchanging myself. I
have been gathering all the info and will soon plunge into the 1st
line of the 1040 NR( all the while having nightmares about the AMT ).
1.
In case of sanity breakdown, I was wondering what the approx cost
would be for doing this tax return. The only item to report is the
sale of this jointly owned (spouse ) cottage that we used for 39 yrs
as a summer residence. (both teachers ).
Also, I used the 1994 cap gains provision ( Canada ) on this property.
Put it on spouse's return. (prop is in both names).
2.
If I get a professional appraisal indicating that my declared value
(my own estimation) of the cottage back in 1994 was way too low, would
Canada Revenue accept this or is it too late ? Am afraid I made a huge
mistake on the value and will take a big hit on cap gain even after
applying a credit for taxes paid to USA.
3.
If I have to pay Canadian cap gains, can I split the gain (spouse and
self ), even though I only declared a 1994 value on my spouse's return
?
Know how busy you must be and would appreciate a brief response to my
3 questions.
Thank you very much.
K XXXXX
==========================================
david ingram replies:
1. I would quote you $750 to $1,500 for the return(s) and the
advice you are looking for but I am giving you this part of the advice
free here but charging you an hour for it if you send in the returns -
LET'S SAY $1,000 TOTAL.
2. You can NOT change the value of your 1994 declaration for your
spouse.
3. AND, You STILL have your own valuation day which is Dec 31, 1981
for your half. In the Nov 12th, 1981 budget, the point was made that
"up to that day" a couple could have two homes tax free no matter
whose name they were registered in.
I would split the values between yourself and your wife for both
Canada and the US using your VD as Jan 1, 1982. Your wife's as Feb
22, 1994 and Feb 25, 1992 and Jan 1, 1985 for the purposes of Vermont
and the US Fed returns. Note that VERMONT AND the US Federal
government (and California) apply an AMT to sales by non-residents.
The good news is that Vermont recognizes the 1985 Treaty exemption and
California does NOT.
The other good news is that I have done it before several times, few
others have ever done any of the points because they just do NOT know
about them. Another interesting fact is that in the last 24 years
since Jan 1, 1982 and Jan 1 1985, no one else in my offices (that I
know of unless Gary Gauvin did one in Ottawa) has ever done one of
these returns using either date, let alone both and I have only had
"one" return (prepared by Doug Lentz, a CPA in Bellingham) come across
my desk where another accountant has used either of the dates either.
Doug not only used the Jan 1, 1985 Tax Treaty date, he had a very nice
little handout explaining it. I have likely amended over 200 returns
over the years to claim the treaty benefits or 1982 date and I am
surprized that you have brought it up. You must have been doing
"some" digging.
I am not surprized that neither the CRA representative or the H & R
Block recognized them either. You have to have been in the business
for 40 years and read a lot of stuff and sit through a lot of boring
proclamations to have any idea. It also helps to have had offices in
30 states and 4 provinces under your ownership or tutelage as well.
Good luck, you have picked off a big bone to chew on.
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 Dundee
Wealth Management and I, David Ingram host a 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
Local calls are taken at (604) 280-0600 and Long Distance calls are
taken at 1( 866) 778-0600
Callers to the show are invited to attend free seminars on financial
planning with such specialities as deductible mortgage interest. They
are held at Fred Snyder's Office at 1764 West 7th in Vancouver - (604)
731-8900 for more information.
=========================================
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321 Fax (604) 980-0325
Email to taxman at centa.com
www.centa.com www.david-ingram.com
Disclaimer: This question has been answered without detailed
information or consultation and is to be regarded only as general
comment. Nothing in this message is or should be construed as advice
in any particular circumstances. No contract exists between the reader
and the author and any and all non-contractual duties are expressly
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==============================
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deals on a daily basis with expatriate tax returns with:
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=========================
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