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QUESTION:
My US retirement trust (401 K) bought a house on Campobello Island, NB,
Canada, for investment. I have rented it with a loss each year. How will I
be taxed when I sell it?
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david ingram replies:
Ah the summer home of Franklin Delano Roosevelt and the wonderful Roosevelt Campobello Park. But enough of the travel information. I just happen to love the Maritimes and consider New Brunswick and Newfoundland and PEI and Nova Scotia to be prime vacation spots.
When you sell the property, your 401(K) will have to pay tax to Canada on any capital gains earned. The losses are not deductible against any capital gains. I hope that your trust has been filing a Canadian tax return each year to report the rent. If it has not been filing a return, your 401(K) is liable for a penalty of 25% of the gross rent collected with no deduction for expenses (section 216(4) on the Canadian Income Tax Act).
We would be glad to help you and can file the Canadian / New Brunswick T3 trust returns for you from Vancouver.
Personally, I do not think you should have bought the property in your 401(K). You should have bought it as an individual.
Hope this helps.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321
[email protected]
www.centa.com www.david-ingram.com
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David Ingram of the CEN-TA REALTY Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
(604) 980-0321 - Fax 913-9123 [email protected]
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