US resident selling Canadian Property -

QUESTION: Hi David,

My husband and I are US Citizens and are thinking of selling our summer home in Canada. I have researched online quiet a bit on the forms/paper work required, but I am unclear how the process/timing would go. Also, I have a tax question as well.

Before we list with a Realtor, I am wondering how much time we should state in our listing agreement as to when the home could be closed on by a potiental buyer, that would allow us to file the T2062 and get the Certificate of Compliance. And is the T2062 typically filed after an offer is made or after the potential buyer has completed inspections, and loan approval? Or is this all done at the time of closing? If so who's attorney holds the tax money that would be sent for the Certificate of Compliance.

We currently do not have an ITN number, should we file for that now or wait and do both forms together. (T1261 and T2062) From what I have read it looks like my husband and I both need to file each of the forms as both names are on the title of the house. Please correct me if I am mistaken.

For my last question, we bought when the exchange rate was 1.535 in 1998 now it is 0.990. How is the gain in the exchange rate handled?

Thank you in advance for your help.


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david ingram replies:

This is likely the last question I will answer until May.  April 30th is our next tax deadline and i am way too far behind.

Depending upon where the house is located, the CRA is taking three months or more to issue the T2062 clearance certificate for the sale.  The certificate must be applied for within 10 days of the completion to avoid a $25.00 per day fine.

The responsibility to withhold the money is that of the purchaser.  Your attorney or their attorney will decide who holds it and it is my experience that the purchaser's attorney will simply give the money to the seller's attorney on their undertaking to hold it until the certificate has been issued.

You can file the T1261 anytime and likely the sooner the better.  That way, your attorney will have a number to use when he or she sends in the T2062.

There is a fillable T1261 form at http://www.cra-arc.gc.ca/E/pbg/tf/t1261/t1261e-fill-06e.pdf You should save a blank form to your computer first.  Fill it out on your computer because it will not save 'with' the information from the government site.

The T2062 is not available in a fillable format  but you can find it at: http://www.cra-arc.gc.ca/E/pbg/tf/t2062/t2062-08e.pdf

You should also fill out T2062A if there is a building on the property to break down the building and land portions -- land on T2062 - Building on t2062.  http://www.cra-arc.gc.ca/E/pbg/tf/t2062a/t2062a-08e.pdf

For US purposes, you use the Dollar values at the time you bought and sold in US dollars.  that means that you will be paying tax on the exchange value on your US return.


On April 6. 2008, David Ingram wrote:

It is very unlikely that blind or unexpected email to me will be answered.  I receive anywhere from 100 to 700  unsolicited emails a day and usually answer anywhere from 2 to 20 if they are not from existing clients.  Existing clients are advised to put their 'name and PAYING CUSTOMER' in the subject line and get answered first.  I also refuse to be a slave to email and do not look at it every day and have never ever looked at it when I am out of town. 
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However, I regularly search for the words"PAYING CUSTOMER" and always answer them first if they did not get spammed out. For the last two weeks, I have just found out that my own email notes to myself have been spammed out and as an example, as I wrote this on Dec 25, 2007 since June 16th, my 'spammed out' box has 47,941 unread messages, my deleted box has 16645 I have actually looked at and deleted and I have actually answered 1234 email questions for clients and strangers without sending a bill.  I have also put aside 847 messages that I am maybe going to try and answer because they look interesting. -e bankruptcy expert  US Canada Canadian American  Mexican Income Tax service and  help
Therefore, if an email is not answered in 24 to 48 hours, it is likely lost in space.  You can try and resend it but if important AND YOU TRULY WANT OR NEED AN ANSWER from 'me', you will have to phone to make an appointment.  Gillian Bryan generally accepts appointment requests for me between 10:30 AM and 4:00 PM Monday to Friday VANCOUVER (Seattle, Portland, Los Angeles) time at (604) 980-0321.  david ingram expert  US Canada Canadian American  Mexican Income Tax  service and help.
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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 in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included." e bankruptcy expert  US Canada Canadian American  Mexican Income Tax  service and help.
David Ingram gives expert income tax service & 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 - dual citizenship
 
Phone consultations are $450 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. ($472.50 with GST if in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
This is not intended to be definitive but in general I am quoting $900 to $3,000 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.
 
$1,200 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

$3,000 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 two or three slips and no capital gains, etc. for $200.00 up.
 
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
 
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 $900 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 for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.
 







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