QUESTION:
I own a winter house in Florida for which I know I have to pay capital gains
if ever I sell it. I also own a condo in Ottawa which I hope to sell when I
buy a condo in Montreal to be near my daughter. My question is twofold (I
hope it isn't too confusing):
1) If I close the deal in Montreal before the Ottawa condo is sold, when I
finally sell in Ottawa, is it considered a second home and therefore taxed
as capital gains, even if I can prove it was for sale and it was just a
timing/problems selling issue? I would move to Mtl & leave the Ottawa condo
empty until it is sold.
2) If I still own my place in Florida ,(which is officially co-owned by my
daughter,) as well as the Mtl condo (which would only have me as sole
proprietor) when I die, I know she will have to pay capital gains to the IRS
for the Fla home. But she just bought her own place in Mtl, so will any
capital gains be owing in Canada if she already paid the IRS for her second
"on paper" winter home.? I'm worried about double taxing of her &/or my
estate.
Thank you for this & your great service/site!!
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david ingram replies;
Canada taxes the ownership and sale of a second home. If the second home is
in Canada, you have the option of claiming either home tax free for that
period of time under Canadian rules.
In your case, the US will be taxing the Florida condo because you are a
non-resident of the US. Since it will be taxed by the US anyway, the Ottawa
condo is the one to claim tax free.
The day you buy Montreal, the Ottawa condo becomes taxable for any increase
in value from that day to the date of sale. I expect that the Ottawa condo
will not increase in value in the next year or if it does, it will not be
much and it may also go down.
If it goes down, there is NO loss claimable against other income. However,
the loss can be carried forward and used as a deduction against any future
gains from the Florida property but only in Canada.
If the property in Florida sells, your daughter will owe capital gains tax
to the US first and Quebec and The Canadian Federal government second on the
time after she ought her Montreal property.
However, she can claim any increase in value up until she bought the
Montreal condo tax free in Canada.
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Phone consultations are $400 for 15 minutes to 50 minutes (professional
hour).
This is not intended to be definitive but in general I am quoting $800 to
$2,000 for a dual country tax return.
$800 would be one T4 slip one W2 slip one or two interest slips and you
lived in one country only - no self employment or rentals or capital gains -
you did not move into or out of the country in this year.
$1,000 would be the same with one rental
$1,200 would be the same with one business no rental
$1,200 would be the minimum with a move in or out of the country. These are
complicated because of the back and forth foreign tax credits. - The IRS
says a foreign tax credit takes 1 hour and 53 minutes.
$1,500 would be the minimum with a rental or two in the country you do not
live in or a rental and a business and foreign tax credits no move in or
out
$2,000 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection
period) with a three or four slips and no capital gains, etc. for $125.00
up.
With a Rental for $300
A Business for $300 - Rental and business likely $400
And an American only (lives in the US with no Canadian income or filing
period) with about the same things in the same range with a little bit more
if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS
be $400 and up.
TDF 90-22.1 forms are $25 for the first and $10.00 each after that when part
of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales) are likely $50.00 for the first and $20.00 each after
that.
Just a guideline not etched in stone.
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