My_question_is: Canadian-specific
Subject: Definition of 'primary residence'
Expert: taxman at centa.com
Date: Thursday July 20, 2006
Time: 07:22 PM -0700
QUESTION:
I am a US citizen who has owned a house in Quebec for 21 years. When I sell
this house, can it be classified as my 'primary' Canadian residence for tax
purposes or will I be required to pay capital gains on the sale? I do not
intend to buy another property here.
I spend at least half the year at this house, with the remainder of the year
spent in the US. I am over 65 years of age.
Thanks for whatever information you can provide.
======================================================
david ingram replies:
If you have been filing a Quebec and Canadian Tax return as a resident for
the last 21 years, the house could be claimed as a personal residence for
Canadian and Quebec Income Tax purposes and would be income tax free.
However, I bet that you are leaving before being in Canada for 183 days to
avoid having to file Canadian returns.
In this case, the house in Canada is subject to Canadian Income Tax.
You will need to pay Canadian Income tax on one-half of the profit.
The rates range from about 25% on the taxable amount under $35,000 to 44% on
amounts over $120,000 with five or six levels in between depending upon the
province. When you go to sell, the purchaser's lawyer will want to withhold
25% of the gross sale price unless you file Canadian Forms T2062 and T2062A
first.
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