US Vacation home - capital gains and various deferrals - 1972, 1982, 1985, 1994 -

My_question_is: Applicable to both US and Canada
Subject:        US Vacation home - capitlal gains
Expert:         taxman at centa.com
Date:           Thursday December 21, 2006
Time:           12:52 AM -0500
QUESTION:
I bought property in Whatcom County in 1978.  Over the years I’ve personally
built and renovated a vacation home on the property.  I’m now planning to
sell the property.  I have only few records of material costs and the labor
of course was my own.  As a Canadian resident my questions are:
1.  At what level will I be subject to capital gains tax?
	2.  How can I limit the level of taxation?
	3.  Will I be subject to any taxation in Canada
-------
---------------------------
david ingram replies:
I am sick at home with pneumonia but this old answer should give you an idea
of what to expect.
You need a valuation for Jan 1 1982, Jan 1 1985 and hopefully you topped up
your capital gains exemption in 1994. The sale is taxed first in the USA and
second in Canada with Canada giving you credit for 50% of the tax paid to
the USA.
----------------
QUESTION:
I have sold my lot in Washington state.  The land title company has held
back 10 % for the IRS.  How can I get this back and/or do I owe more to USA?
Also, what are the ramifications on my Canadian personal income tax?  Also
do you know when I should convert to Canadian dollars.  Your help would be
greatly appreciated.  Thanking you in advance.
Regards
==============================
david ingram replies:
You will need to file a US 1040NR in early 2006 for the 2005. You are also
subject to the alternative minimum tax form 6251. I have no idea whether you
will get a refund or not.
As an example, if you paid $20,000 in 1975 and just sold it for $300,000 and
they withheld $30,000, you will owe more tax to the US.
If you paid $250,000 and sold it for $300,000 and they withheld $30,000, you
will be getting a refund.
There is a further wrinkle in that if you owned it on Jan 1, 1985, there is
a further calculation to make to take advantage of the US Canada Tax Treaty,
Indeed, if it was a property you bought in 1964 as a summer cottage, you
would have possible valuation days for Canadian tax purposes on Jan 1, 1972,
Jan 1, 1982, and could have made the $100,000 election for Feb 22, 1994.
For the US, there would have been no tax up to Jan 1, 1985 and then it would
have been taxable thereafter and you have to have been in this business for
42 years (as I have) to really understand them all.
The Canadian calculation has to be made using the exchange rates for the
different years.  When you are finished, if you owe tax in both countries,
you pay the US first and then claim a foreign tax credit on lines 431 and
433 of your Canadian Income Tax return.
Glad to look after it for you when the time comes.  The above works for
Texas, Alaska, Florida, Washington, Nevada, Tennessee, and New Hampshire.
In 43 other states you have to file a state return as well and some like
California and Vermont have a State Alternative Minimum Tax as well as the
Federal.
Answers to this and other similar  questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, I, david ingram am a
permanent guest on Fred Snyder of Dundee Wealth Managers' LIVE talk show
called "ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the internet
at
www.600AM.com <http://www.600am.com/>
Call (604) 280-0600 to have your question answered.  BC listeners can also
call 1-866-778-0600.
Callers to the show and questioners on this board can also attend the
Thursday Night seminars on finance and making your Canadian Mortgage
Interest deductible.
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
Home office at:
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 9 AM to 9 PM 7 days a week (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. No contract exists between the reader and the author and any
and all non-contractual duties are expressly denied. All readers should
obtain formal advice from a competent and appropriately qualified legal
practitioner or tax specialist in connection with personal or business
affairs such as at www.centa.com <http://www.centa.com> . If you forward
this message, this disclaimer must be included."
Be ALERT,  the world needs more "lerts"
This from "ask an income tax and immigration expert" from www.centa.com
<http://www.centa.com/>  or www.jurock.com <http://www.jurock.com/>  or
www.featureweb.com <http://www.featureweb.com/> . David Ingram deals on a
daily basis with expatriate tax returns with:
multi jurisdictional cross and trans border expatriate problems  for the
United States, Canada, Mexico, Great Britain, the United Kingdom, Kuwait,
Dubai, Saudi Arabia, Thailand, Indonesia, Japan, China, New Zealand, France,
Germany, Spain, Italy, Russia, Georgia, Brazil, Peru, Ecuador, Bolivia,
Scotland, Ireland, Hawaii, Florida, Montana, Morocco, Israel, Iraq, Iran,
India, Pakistan, Afghanistan, Mali, Bangkok, Greenland, Iceland, Cuba,
Bahamas, Bermuda, Barbados, St Vincent, Grenada,, Virgin Islands, US, UK,
GB, and any of the 43 states with state tax returns, etc. Rockwall, Dallas,
San Antonio and Houston Texas
Denmark, Finland, Sweden Norway Bulgaria Croatia Income Tax and Immigration
Tips, Income Tax and Immigration Wizard Income Tax and Immigration Guru
Income Tax and Immigration Consultant Income Tax  and Immigration Specialist
Section 216(4) 216(1) NR6 NR-6 NR 6 Non-Resident Real Estate tax specialist
expert preparer consultant expatriate anti money laundering money seasoning
FINTRAC E677 E667 105 106 TDF-90 Reporting $10,000 cross border transactions
Alaska,  Alabama,  Arkansas,  Arizona,
California,  Colorado, Connecticut,
Delaware, District of Columbia,  Florida,
Garland, Georgia,  Hawaii,  Idaho,  Illinois,
Indiana,  Iowa,  Kansas,  Kentucky,
Louisiana,  Maine,  Maryland,
Massachusetts, Michigan, Minnesota,
Mississippi,  Missouri,  Montana,  Nebraska,
Nevada, New Hampshire,  New Jersey,
New Mexico, New York, North Carolina,
North Dakota,  Ohio,  Oklahoma,  Oregon.
Pennsylvania,  Rhode Island,  Rockwall,
South Carolina, South Dakota, Tennessee,
Texas,  Utah, Vermont,  Virginia,
West Virginia, Wisconsin, Wyoming,
British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, Quebec City,
New Brunswick, Prince Edward Island,
Nova Scotia, Newfoundland, Yukon and
Northwest and Nunavit Territories,
Mount Vernon, Eumenclaw, Coos Bay
and Dallas Houston Rockwall Garland
Texas  Taxman and Tax Guru  and wizzard
wizard - consultant - expert - advisor -advisors consultants - gurus - Paris
Prague Moscow Berlin
Lima Rio de Janeiro, Santaigo
New York, Boston, Sacramento, Minneapolis, Salem, Wheeling, Philadelphia,
Pittsburgh, Atlanta, Pensacola, Miami, St Petersburg, Naples, Fort Myers,
Cape Coral, Orlando, Atlanta, Arlington, Washington, Hudson, Green Bay,
Minot, Portland, Seattle, St John, St John's, Fredericton, Quebec, Moncton,
Truro, Atlanta, Charleston, San Francisco, Los Angeles, San Diego,
Sacramento, Taos, Grand Canyon, Reno, Las Vegas, Phoenix, Sun City, Tulsa,
Monteray, Carmel, Morgantown, Bemidji, Sandpointe, Pocatello, Bellingham,
Custer, Grand Forks, Lead, Rapid City, Mitchell, Kansas City, Lawrence,
Houston, Albany, Framingham, Cambridge, London, Paris, Prince George, Prince
Rupert, Whitehorse, Anchorage, Fairbanks, Frankfurt, The Hague, Lisbon,
Madrid, Atlanta, Myrtle Beach, Key West, Cape Coral, Fort Meyers,   Berlin,
Warsaw, Auckland, Wellington, Honolulu, Maui, Kuwait, Molokai, Beijing,
Shanghai, Tokyo, Manilla, Kent, Winnipeg, Saskatoon, Regina, Red Deer, Olds,
Medicine Hat, Lethbridge, Moose Jaw, Brandon, Portage La Prairie, Davidson,
Craik, Edmonton, Calgary, Victoria, Vancouver, Burnaby, Surrey, Edinburgh,
Dublin, Belfast, Glasgow, Copenhagen, Oslo, Munich, Sydney, Nanaimo,
Brisbane, Melbourne, Darwin, Perth, Athens, Rome, Berne, Zurich, Kyoto,
Nanking, Rio De Janeiro, Brasilia, Colombo, Buenos Aries, Squamish,
Churchill, Lima, Santiago, Abbotsford, Cologne, Yorkshire, Hope, Penticton,
Kelowna, Vernon, Fort MacLeod, Deer Lodge, Springfield, St Louis, Centralia,
Bradford, Stratford on Avon, Niagara Falls, Atlin, Fort Nelson, Fort St
James, Red Deer, Drumheller, Fortune, Red Bank, Marystown, Cape Spears,
Truro, Charlottetown, Summerside, Niagara Falls, Albany STAR WARS

Comments (0)


CEN-TA Cross Border Services - Tax, Visas, Immigration
http://www.centa.com/article.php/CanWeekofMon20061218000115.html