capital gains tax in Canada for condo owned by non-residents -
QUESTION:
I own a condo in Vancouver with my partner.
I am a Canadian and US citizen, residence in Hawaii. XXXX is an American citizen with residence in Hawaii. Are our capital gains rates different if we sell the condo?
-------------------------------------------------------I own a condo in Vancouver with my partner.
I am a Canadian and US citizen, residence in Hawaii. XXXX is an American citizen with residence in Hawaii. Are our capital gains rates different if we sell the condo?
david ingram replies:
Your citizenship is neither a plus nor a negative in the calculation because you will be taxed as a non-resident.
In general, Canada's progressive tax rate ranges from about 23% on amounts under $36,000 to 44% on amounts over $120,.000
But only 50% of a capital gain is taxable.
If the unit has gone up $400,000, you would each be taxable on one half of $200,000 or $100,000. The tax on $100,000 is about $29,000 each.
When you go to sell it, you must fill in forms T2062 and T2062A within 10 days of the actual sale or pay a $25.00 a day fine for every day late with a minimum of $100.00 and a maximum of $2,500. That would be each of you.
Then, you would report the sale again on US schedules 4797 and D if you had rented it out and schedule D if it was not a rental.
Any tax paid to Canada would be a federal foreign tax credit on US form 1116. Hawaii will also give you a credit as tax paid to another jurisdiction.
We are happy to asssit you if you need help. Today, we are doing the paperwork for California and Colorado and Washington State residents.
This would also be a good question if you wanted to phone the radio program on Sunday Morning. It would be a long distance call to 604-280-0600 but the answer would be free. If yo call my office for the consultation, the fee is $400.00 Canadian and you have to pay for the phone call as well as explained further below.
You can hear the program live in Hawaii at www.600am.com. It is on from 9 AM to 10:30 AM Vancouver time every Sunday morning which I think is 6:00 AM to 7:30 AM your time
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This is not intended to be definitive but in
general I am quoting $900 to $2,900 for a dual country tax
return.
$900 would be one T4 slip one W2 slip one or two
interest slips and you lived in one country only (but were filing both
countries) - no self employment or rentals or capital gains - you did not move
into or out of the country in this year.
$1,100 would be the same with one rental
$1,300 would be the same with one business no
rental
$1,300 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.
$1,600 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
$1,700 would be for two people with income from two countries
$2,900 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 two or three slips and no capital
gains, etc. for $200.00 up.
With a Rental for $400
A Business for $400 - Rental and business likely
$550 to $700
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 $800 and up.
TDF 90-22.1 forms are $50 for the first and $25.00
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.
Catch - up returns for the US where we use the Canadian return as a guide will be $150 to $500.00 depending upon numbers of bank accounts, RRSP's, existence of rental houses, etc.
Just a guideline not etched in stone.
This from "ask an income trusts tax and immigration expert"
from www.centa.com or www.jurock.com or www.featureweb.com. David Ingram deals on a daily
basis with expatriate tax returns with multi jurisdictional cross and
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