Fw: T2062 T2062A capital gains on Canadian property

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My_question_is: Applicable to both US and Canada
Subject:        capital gain 
Expert:         [email protected]
Date:           Sunday March 28, 2004
Time:           10:37 AM -0800
QUESTION:
What do I do with capital gain( sale of real estate)in Canada with no tax payable or only part of it having tax to pay in Canada and when this appers on US return it looks to me that tax will be more than what it is in Canada and therefore looks like I am going to have to pay tax to US!!!!!!
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david ingram replies:
Your first tax liability is to Canada if the property is in Canada.  You will calculate and pay tax to Canada on a T1 return with Schedule 3 filed to report the Capital gain. The purchaser will withhold 25% of the GROSS sales price unless you get a Form T2062 approved for reduced withholding.
http://www.ccra-adrc.gc.ca/E/pbg/tf/t2062/t2062-01e.pdf
If the property was a rented property, you also need to file a T2062A with the T2062.
http://www.ccra-adrc.gc.ca/E/pbg/tf/t2062a/t2062a-01e.pdf
If the property was rented, you should have been filing Canadian returns under Section 216(4) Form T1 plus 776) to report the rental income to Canada and Schedule E to report the income to the US on your 1040 EVEN IF IT WAS LOSING MONEY.
After paying the tax to Canada, you will calculate the gain again for US purposes and if there is a calculated tax (schedule D) 
you will claim a foreign tax credit for the tax paid to Canada on US form 1116.
And, I remind you and all readers that we make our living doing this kind of work.  Feel free to mail, email, snailmail, fax or courier your work to our office at:
david ingram's CEN-TA Group
108-100 Park Royal South, 
West Vancouver, BC, Canada
V7T 1A2
www.centa.com
[email protected]
 (604) 980-0321 - Fax to (604) 913-9123
And remember, even if you were losing money renting and even if you are selling it at a loss, you have to do the tax returns to tell the respective governments that you lost money.  If not filed on time, both governments can reject your expenses and tax you on the gross incomes although I will be the first to admit that this solution is rarely used. (I have a Canadian one in the office right now however dealing with the 1996 tax year).  It does NOT go away.
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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 & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
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