david ingram replies:
1. Not true.
2. The escrow agent will withhold 10% of the sale price for federaltaxpurposes and 3.5% for California tax purposes and give you the balanceright away UNLESS
a - the house is being bought as a personal residence by someone and isless than $300,000 or
b - you have written to the International Tax Office of the IRS amndsubmitted documentation which proves that you did not make a profit orthe 10% would be too much. The IRS will send a certificate statingthat no withholding is required or stating an amount. Canada has amuch more onerous set of withholdings. Our withholding is 25% unlessforms 2062 and 2062A are submitted to the CRA and a comfort certificateis issued allowing a smaller withholding.
If you have either a or b above, you will get all of your money rightaway.
3. If there is no profit, there is no tax in the US. Sometimes,there is a profit in Canada because of exchange or vice versa. Inother words, you could have made a profit int he USA and owe tax andstill have a very real loss in Canadian funds for Canada. That hasbeen true int eh last three years.
The reverse was true from 90 to 95 to 2004 . You could have lost moneyin the US and still owe tax to Canada because of the very real rise inthe value of the US dollar.
The same situation applies to 43 other states. Hawaii, for instance,withholds 5%. California and Vermont (2 of many) have Alternativeminimum tax calculations. California does its calculation based uponyiour world income. Vermont just uses US income.
Every state is different although some are just about the same.
