Capital gain when selling a house after move to US Form T2062 - nternational non-resident cross border expert income tax service
QUESTION:
Hi There,
I am a canadian and started working in redmond WA, usa from Mar 2008. I will sell my house in mar 2008. I am concerning if i need to report capital gain when I file the income tax for 2008. (I am going to claim non-resident from Mar 2008)
Thanks
---------------------------------------------
david
ingram replies:Hi There,
I am a canadian and started working in redmond WA, usa from Mar 2008. I will sell my house in mar 2008. I am concerning if i need to report capital gain when I file the income tax for 2008. (I am going to claim non-resident from Mar 2008)
Thanks
---------------------------------------------
If yu lived in the house in Canada and are selling it soon after leaving, the houise will not be taxable in Canada or the USA. However, if the purchaser understands that you are a non-resident of Caanda, they are supposed to withhold 25% of the sale price unless you get a T2062 certificate filed.
this older question will explain the T2062 - ignore the parts about paying tax because as described, you will not be taxable.
QUESTION: I have moved to the US since 2000 and current a green card
holder. I still have a property in canada and currently listed as second home in
the US tax return. I am planning to sell this property in the near future. Do I
need to pay capitial gain tax in both US/Canada and how
much?
-------------------------------------------------------david ingram replies:
It sounds like the second home in Canada has being sitting empty.
When you sell it, the purchaser's lawyer is going to withhold 25% of the gross sale price as Canadian Withholding Tax - UNLESS - you file form T2062 within 10 days of the sale. .
T2062 - http://www.cra-arc.gc.ca/E/pbg/tf/t2062/t2062-07e.pdf
The purpose of the T2062 is that it will identify the value of the house the day you crossd the border and the purchaser will only have to withhold tax on 25% of the difference invalue between the day you left and the day you sold it.You can NOT claim real estate commissions and other costs of sale on this form which means when the return is actually filed there is always a refund..
THIS IS NOT THE TAX RETURN, it is merely a withholding tax form.
Tax RETURN
You will then have to file a tax return to report the sale next year. This return will tax you on 50% of the gain by using schedule 3 and 1. You can claim the real estate sales commissions, lawyers fees and other costs of sale at this point. File a T1 tax return with Schedule 3 and Schedule 1.
NON-RESIDENT T1 Return - http://www.cra-arc.gc.ca/E/pbg/tf/5013-r/5013-r-06e.pdf
Schedule 3 - Capital Gains - http://www.cra-arc.gc.ca/E/pbg/tf/5000-s3/5000-s3-06e.pdf
Non-Resident Schedule 1 - http://www.cra-arc.gc.ca/E/pbg/tf/5013-s1/5013-s1-06e.pdf
All these figures are then converted to US dollars and put on schedule D of the US return. taxes paid to Canda are claimed on US schedule 1116.
RENTAL
If the property was rented, you also have to file form T2062A and make sure that your T1159 and T776 forms were filed for each year the property was rented.
T2062A - http://www.cra-arc.gc.ca/E/pbg/tf/t2062a/t2062a-07e.pdf
T1159 - http://www.cra-arc.gc.ca/E/pbg/tf/t1159/t1159-06e.pdf
T776 - http://www.cra-arc.gc.ca/E/pbg/tf/t776/t776-fill-06e.pdf (fillable)
If rented, make sure the T776 rental figures were converted to US dollars and put on schedule E. Any taxes paid to Canada would go on the schedule 1116 you used for the capital gains tax paid.
Schedule E - http://www.irs.gov/pub/irs-pdf/f1040se.pdf
Schedule 1116 - http://www.irs.gov/pub/irs-pdf/f1116.pdf
Note that the T2062 and T2062A forms will likely be the same from year to year. However, the US and Canadian schedules shown above are all 2006 forms and you will need to get hold of the equivalent 2007 or 2008 forms when you actually make the sale.
And, of course, we can look after all of it for you when the time comes. That is what we do.
David Ingram wrote:
However, I regularly search for the words"PAYING CUSTOMER" and
always answer them first if they did not get spammed out. As an example, as I
write this on June 28th, since June 16th (12 days), my 'spammed out' box has
7,118 unread messages, my deleted box has 2630 I have actually looked at and
deleted and I have answerd 63 email questions I have answered for clients and
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and answer because they look interesting.
Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office)
$1,600 would be for two people with income from two countries
David Ingram expert income tax and immigration help and preparation of US Canada Mexico non-resident and cross border returns with rental dividend wages self-employed and royalty foreign tax credits family estate trust trusts income tax convention treaty
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Therefore, if an email is not answered in 24 to 36 hours, it
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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
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author and any and all non-contractual duties are expressly denied. All
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David Ingram gives expert income
tax & immigration help to non-resident Americans & Canadians from
New York to California to Mexico family,
estate, income trust trusts Cross border, dual citizen - out of
country investments are all handled with competence &
authority.
Phone consultations are $400 for 15
minutes to 50 minutes (professional hour). Please note that GST is added if
product remains in Canada or is to be returned to Canada or a phone consultation
is in Canada.
This is not intended to be definitive but in
general I am quoting $800 to $2,800 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
$1,600 would be for two people with income from two countries
$2,800 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 $150.00 up.
With a Rental for $350
A Business for $350 - Rental and business likely
$450
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.
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
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