My question is: Applicable to both US and Canada
QUESTION: My son is in Graduate school at univ. of chicago for another 4
years, I reside in Toronto. I'm considering purchasing a condo unit for him
to reside in while there then selling it. What would be my US and Canadian
tax implications on purchasing and reselling the condo unit.
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david ingram replies:
When your son is in the US on a student visa he can be treated as a
NON-Resident of the US and is entitled to keep his Ontario Medical and
Hospitalization (up to 5 years) and Ontario driver's licence and car
licence.
However, that makes him liable for Canadian Income Tax because he is a
resident of Ontario.
I would prefer to make him a resident of Illinois and have him get an
Illinois Driver's Licence, Car licence AND own the condo in his name.
That way, his condo will be capital gains tax free in both countries and he
will only pay tax in Illinois.
He does lose his Ontario Medical with that scenario but most (in my
experience) graduate students are working within the program and have local
medical provided.
Of course, this is when he packs up the information and sends us his tax
returns to North Vancouver.
============
If you do not do that, the condo is subject to Illinois and US federal
income tax and then must be reported again in Canada and 50% of the profit
is subject to tax in Canada at your highest marginal tax bracket which is
likely 47%.
The good news is that Canada will give you credit for the tax paid to
Illinois and the US and it will likely balance itself off.
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------------
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