Date: Thursday March 09, 2006
Time: 09:57 AM -0800
LOOKING FOR INPUT HERE -
QUESTION:
I am US resident and citizen. My new wife is a Canadian resident and
citizen. As you advise, we'll file jointly in the US. I am applying for a
green card for her. When she is ready to move to the US in a couple of
years and sell her principal residence, the gain will be tax free in Canada.
Will the US go after her for capital gains although it's her principal
residence?
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david ingram replies:
The gain may / will not all be tax free in Canada because she is married to
you and you have a house. Canada will want to tax her on the increase in
value of the house on the assumption that , as a couple, you will be
claiming your house tax free.
The US / Canada Income Tax Convention says the value of the house for US
purposes is the value when she becomes a resident.
However, although I am sure this situation arises often, it has never been
asked before and I can not think of any in the last 3 or 4,000
returns we have done.
I am going to throw it out to my audience and see if any of the 13,000+
readers have a better answer.
------------------------
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