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Hi David
I found a page on the internet at http://lists.centa.com where you responded to someone's question about purchasing property and possibly renting it out. I see that you are working out of British Columbia, so I don't know if you can help me as I live in Ontario. But it can't hurt to ask right? Similar to the example question, I am interested in purchasing properties in the state, and selling them for a profit. I'm thinking New York state as it's the closest to me at this point. If you can answer this, what taxes would I need to pay upon purchasing the property, and as well upon the sale of the property. Do I have to pay the a U.S. federal tax, state tax and/or Canadian income tax? I you could get back to me at your earliest convenience, I would really appreciate it. If you aren't the person to speak to about this, would you happen to know where to look for this information.
Thanks so much for your time.
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David Ingram replies:
Over the last 25 years, I have been involved in over 2,000 real estate buys and sells in Ontario and prepared tax returns for at least a dozen New York state sales in the last couple of years.
When you sell the property, as a non-resident, you will pay a minimum of 26% tax to the US Federal Government on a form 1040NR. You will then pay a progressive rate of tax to the State of New York an dif you happened to be buying in Greater New York City, could find your self paying a city tax or Bronx tax, etc.
You would then convert the amounts to Canadian dollars and report the sale again on your Canadian / Ontario return. You would claim credit for the taxes paid to the US on your Canadian return.
If you are buying and selling in a short time span, both countries are more likely to classify you as a business than an investor with capital Gains tax treatment. Goto www.centa.com and read the Capital gains section in the Income Tax Guide section for 27 pages describing capital gains versus straight income for real estate sales.
Hope this helps.
David Ingram's US/Canada Services
US/Canada/Mexico Tax Immigration & working Visa Specialists
US / Canada Real Estate Specialists
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