QUESTION:
My Mother passed away in January leaving her Arizona property to me and my
brother. When we sell the property how will the capital gain be calculated?
My brother and Mother are both US citizens.
I am both US and Canadian but have lived in Canada since 1965 and never
filed a US Tax Return.After reading your website I suppose I have a
problem??
==================================================
david ingram replies:
If there is any estate tax, it would be paid by your mother's estate. She
would have to have over $1,500,000 in assets to have paid estate tax in 2004
or 2005.
(as proposed, this goes to $2,000,000 for 2007 and 2008, $3,500,000 for 2009
does not exist in 2010 and goes back to $1,000,000 (not very likely) in 2011
unless Bush and Congress manage to get Estate tax repealed as it was in
Canada.
For US tax purposes, your capital gains tax would be calculated on any
increase in value from the date you inherited the property until it was
sold.
For Canadian purposes, you would convert the amounts to Canadian dollars and
report the profit on schedule 3 and schedule 4,
To claim tax credits for the tax paid to the US, the taxable part of any
capital gain would go on line 433 of the Canadian Schedule 1 and the tax (in
Cdn $$) paid to the US would go on line 431 of schedule 1.
\r
And, yes, you should have been and should have done your US returns. Now
would be a good time to catch up on the last six years.
I / we would be happy to do them for you by fax, courier, pdf file or snail
mail.
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, I, david ingram am a
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