My mother passed away on Novenber 25th, 2007. I was on the property title as joint tenant with right of survivorship solely for the purpose of avoiding probate. I live in Nebraska and was up there to take care of things from November 24th till December 18th. While there I had the property transferred solely into my name. I put the property on the market and have accepted an offer with possesion date of February 21st, 2008. My question is, once this transaction is complete, how do I transfer the funds to the US? Also, are there any tax implications either in Canada or the US? Thirdly, I have been trying to find an insurance broker or company that will insure the property/house for vandalism/water damage until the new owners take possesion. The house is vacant. So far, I have run into a brick wall. Do you know any broker or company that will provide this type of insurance coverage? ----------------------------------------------------------------------------------
david ingram replies:
You have created some problems for yourself which are surmountable but time consuming.
1. Because you are a non-resident of Canada, the law is quite clear that the purchaser must withhold 25% of the purchase/sale price and remit it to the CRA.
2. This can be reduced by filing Forms T2062 and T2062A which allows 25% of the actual profit on the sale to be deducted instead of 25% of the gross price.
You will have to prove to the CRA that 'your' half of the house was NOT yours but that you were only holding it for probate purposes. That is/was best done with a
separate agreement between your mother and yourself when it was put in your name as a joint tenant. That agreement should have said.
a. the house was in joint tenancy for probate purposes and that
b. you would not attempt to sell your half by partitioning the property and that
c. you would not pledge the property as security and/or list it as an asset in any financial papers.
AND, AND, if you were married at the time, your spouse should also have acknowledged those facts in writing and agree that if there was a divorce, she would not attempt to
take half of your half of mother's house.
Without that kind of documentation, the chances are that the CRA will want 25% of any increas in value from when it was put in your name. Thiis may be more than any probate fees saved.
Transferring the money is easy. Just get the official bank transit and account numbers from your US bank and any Canadian bank can transfer money the same day to your accouont in the US.
With regard to insurance, I was a speaker to 113 Canadian resident members of Ozzie Jurock's REAG tonight on the subject of investing in the US and what they could or could not do.
See www.jurock.com for more info.
One of the other speakers was Jeff Fawcett of Fawcett Insurance Agencies in North Vancouver.. He knows his stuff when it comes to Canadian rentals and if anyone can look after you, he can.
Remember though, if it is vacant, someone will have to do a regular inspection. If it is listed, the listing agent can be the inspector.
You should be able to get hold of him at: 604-929-3494.
You will also have to report the property's sale to both the US and Canadian governments and file a tax return to Canada for 2008 in April 2009 for the 2008 tax year..
It is unlikely that you will have any tax to pay if you get the CRA to accept that it was not your property until mom passed. Since you have sold it so close to her death, there is not going to
be any liklihood of any serious capital gains between the date of death on Nov 27, 2007 and your presumed sale within a month or at the most 6 weeks. Although my North Vancouver
house went up by municipal assessmetn by over
$120,000 in the 12 months from July 1, 2006 to July 1 2007. That is $10,000 a month. Fortunately for you, the generally accepted fact right now is that there has been no
gain in the six weeks since mom's death. Therefore, no tax.
If you are the sole heir, you will also have to deal with mom's final T1 return for 2007 and possibly a T3 Estate return to deal with any interest or other monies recieved after her death.
We can obviously do these and the T2062 and T2062A forms and your own CANADIAN 2008 RETURN for you if necessary.
these older questions will help with the money question
Thanks for the minutes you just spent with me on the phone about taking money to Seattle to pay for a car I have already ordered and put a deposit on.
send me the links for the forms for both the Canadian side and the
What happens to this information after I provide the forms? Just record-keeping for both countries to determine how much money is going in each direction?
1-866-346-8722 (toll free)
CEN-TA Cross Border Services - Tax, Visas, Immigration