Subject: US taxes on Canadian inheritance Expert: taxman at centa.com Date: Wednesday January 24, 2007 Time: 09:51 PM -0500 QUESTION: Unfortunately, recent events have presented a need for me to find out the answer to a cross-border taxation question. I am a dual US/Canadian citizen, living in the US for the past 13 years. My mother, a Canadian citizen, recently passed away and left an inheritance consisting of cash and a home in Canada to myself and my 2 siblings (both of whom live in Canada). Our intention is to sell the home and it's contents. My question is what tax implications does this have for me here in the US? The total value will be less than $2M US, so according to what I've been able to learn, I would not have to pay tax if the inheritance originated in the US. Since it originates in Canada, does this imply I need to pay capital gains tax here in the US? Any advice would be most greatly appreciated. Thank you. -------------------------------------------------- david ingram replies: There is no inheritance tax or any other taxes that you will / would have to pay on the corpus (body) of the estate. If your share is $700,000, you get $700,000. However, if any interest or dividends or rents are received by you, those would be taxable to you in both Canada and the US. For your purposes, it would be better for a T-3 Trust tax return to be prepared for your mother's estate and the estate pay tax on whatever is earned before distribution. Then whatever you receive will be tax paid money. The Alternative is that the estate does distribute earnings to you and does not pay tax itself. If this is the case, the estate advisor may want to do this because it is more conventional), the estate must withhold 10% of any interest it pays you under Article XI of the US Canadian Tax Treaty. If there were dividends paid, the withholding tax would be 15% under Article X and if the house was rented in the meantime, the withholding is 25%. --------------- David Ingram's US / Canada Services US / Canada / Mexico tax, Immigration and working Visa Specialists US / Canada Real Estate Specialists My Home office is at: 4466 Prospect Road North Vancouver, BC, CANADA, V7N 3L7 Cell (604) 657-8451 - (604) 980-0321 Fax (604) 980-0325 Calls welcomed from 10 AM to 9 PM 7 days a week Vancouver (LA) time - (please do not fax or phone outside of those hours as this is a home office) email to taxman at centa.com <mailto:taxman at centa.com> www.centa.com <http://www.centa.com/> www.david-ingram.com <http://www.david-ingram.com/> 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. 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