As per Canadian Income
Tax law (section 116) that a non-resident dispose a property then buyer's lawyer
must withheld 25% of sale price and remit to Revenue Canada. I am living in US
(for last 1 year) and rented my property in Canada but now wanted to sell that
house. I have been paying Canadian taxes every year without showing any US
income as I don't have any US income (thats a different topic)but buyer's lawyer
designated me as non-resident (I am Canadian citizen though) and said he never
been here in last 6 months therefore he'd deduct 25% of the sale price. I found
out this when 2 days left for closing so I suggested my lawyer to step back from
selling the house to the buyer. I signed all the papers in the front of US
lawyer and courier it to my lawyer 3 days prior to closing. Obviously, I don't
want to them to take off 25% of sale money so I didn't want to sale anymore.
Since, Its been couple of days over since the closing date was and haven't heard
anything from buyer's l
lawyer yet. I know this deal has gone bad but what
are my chances that I can still get to keep my house? What are other
consequences I might be facing that buyer's lawyer might cause in coming
The 25% is the starting figure and is only a withholding
If you left Canada and the house was worth $400,000 and you are
selling it for $400,000, you can file forms T2062 and T2062A and have the
If it was worth $400,000 and you are selling it for
$500,000, by filing forms T2062 and T2062A, you can have the withholding reduced
to $25,000 (25% of the $100,000). When you filed your actual tax return at
the end of the year, the actual tax on $100,000 profit would only be about
$12,000 and you would get a $13,000 refund.
By canceling the sale or
failing to proceed, the realtor has a legal right to claim a full Real estate
commission from you and the buyer can sue you for non-performance and any losses
they have sustained. Those two situations are likely far more serious than
the tax possibilities.
You need to consult another real estate
lawyer to understand your rights.
If no one told you about the forms
T2062 and T2062A, you were not served properly.
If your lawyer did not
explain form T2062A and T2062 to you , you need a different lawyer.
is a BC sale you could try Bill Spohn at (604) 926-8681 or David Stoller at
(604) 922-4702 -- both understand non-resident sales.
You also should
have filed form T1161 for the return for the year that you left
these older questions might
Hello ! I am a Canadian citizen moved to USA in Jan.1.07. I am selling my house after 10 months(empty after I left).I still have bank a/c's and my wife is a Canadian PR. Will I have problems to sell my house in Chatham, Ontario. Please reply - 309-333-xxxx.
david ingram replies:
I see you sent this twice - sorry it was not answered but I do get 30 to 100 a day and can not even begin to answer them all.
This has been answered for other people however in the time between the two questions.
Because you are not living in Canada, anyone buying the house is required to withhold 25% of the GROSS sale price unless you fill in and file forms T2062 and T2062A with the CRA within ten days of the actual sale.
This form would take into account that the house was your personal residence up to the day you left.
For 2007, you must file form T1161 as a departing resident. Failure to file Form T1161, can end up with a $2,500 fine as shown below. Happy to look after these departing Canada returns for you.
These similar questions were answered on Feb 17 for instance.
(1) I am a Canadian Citizen and employed in
Canada from Jan 01, 2007 to June 30, 2007 and my tax was deducted at source. I
have received T-4
(2) Since the employer closed down the facility, I
received unemployment benefit until November 04, 2008. I have not received
any paper from EI income so far
(3) Since November 05, 2007, I am
working in USA under TN-1 work permit and i have W2 from my employer
you please tell me how much it would cost for filing tax against above
income? Which documents I need to provide you?
Next year, I would
have only income from USA and how much it would cost to file tax return.
Do I have to file tax return in Canada for the year 2008 against USA
employment earning only? It is temporary yearly base job contract. I
intent to be a Canadian Citizen.
If you do not want to report your US income to Canada,
you need to file a departing Canada return including form T1161.. If your house
is rented out, you should have filed form NR6 BEFORE leaving the
Our fees are outlined in the Disclaimer below following some
QUESTION: Hi David, I am Canadian citizen, worked in
Canada for the first 5 months of 2006. then moved to US and worked then for the
rest of 2006. I have income from Canada employer, Canadian bank and US employer.
I filed tax return on my US income to IRS already. I haven't done Canadian tax
return yet. I had thought I only need to file Canadian tax return on my Canadian
income. But it seems both CRA and IRS requested to report my world income to
both. I am confused. What should I do to file the tax return to both? More
specially, I received NR4 slip from CIBC bank. I could not find where to enter
this form when I used Ufile.ca. How can I enter US W2 form into any Canadian tax
form? How can I enter T4 slip into US tax return form? thanks a lot!
An NR4 does not go on the Canadian return. It goes on
Schedules B and 1116 of the US return
The T4 does not go on the US return
unless you are filing as a year round resident as in 2 below.
I am too
busy to come up with a new answer but this older one will give you an
QUESTION: Hi David, I really need your help in filling U.S tax
and I am getting mixed messages which forms to file. I am a Canadian Citizen in
U.S on TN visa for more than a year. I have RRSP in Canada over 10,000 put in
fixed bond and saving account in a bank. What do I need to file here and what
forms do I need to fill. Do I still have to file tax in Canada for Canadian
earning? Please help.
You need to file a departing Canada tax return and file T1161 if
you left more things than your RRSP behind. The Canadian return will only
include Canadian earnings although if you had a Home Buyers Plan, it is all due
and taxable on the departing Canada return unless you have paid it
For the US, you have two choices:
1. File a
1040NR dual status statement and a Dual Status 1040 Income Tax return with no
2. File a full 1040 which
includes your Canadian income and gives you a full standard deduction and the
right to file a joint return if married. This is usually the best if you
left Canada early in the year as you did.
If you can't figure it out,
file an extension form 4868 (find it at http://www.irs.gov/pub/irs-pdf/f4868.pdf
and then send the information to us at the address in blue below to
complete for you.
We moved to the US in December 2004. At the time that
we did our 2004 taxes, we did not have any 2004
US income to worry about, so we used ufile.ca to do our Canadian taxes. We
have a house in Canada that we
kept with the intent of renting it out, and were unaware of the
requirement to file a T1161 until we began
working on our 2005 taxes with the assistance of an accountant. By
the time he got involved, it was already
late. In January 2007, CRA assessed a late filing penalty for both
myself and my husband as joint owners of the
property. The statement was sent to our old address, even though we
updated our address at the time we sent
in our 2005 tax returns. My question is this: Is there any way that
we can get the late filing penalty forgiven?
We have done everything else by the books, and we did file the T1161
when our accountant brought it to our
The T1161 for a departing Canadian is due on April 30th
of the year following the departure. The penalty is a minimum of $100 or
$25.00 per day to a maximum of $2,500. This is the same penalty for the
late filing of a T3 return with distributions.
I know of no method of
officially canceling the $2,500 penalty you will each have received. You
could try writing to the FAIRNESS COMMITTEE and explain the situation and they
might cancel it. for $5,000, it is certainly worth the effort.
can start looking up the rules for the FAIRNESS COMMITTEE here:http://www.cra-arc.gc.ca/agency/fairness/prov_3-e.html
do not expect them to agree but they might.
You might write to Prime
Minister Stephen Harper as well. The penalty is unfair because although
easy to find if you know what you are looking for, NO ONE knows about it
The tax preparation programs do not tell you to
fill it in when you put a date in for departing Canada.
penalty is imposed after 100 days.
SUGGESTED PRICE GUIDELINES - Aug 5,
david ingram's US / Canada Services
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
Cell (604) 657-8451 -
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) expert US Canada Canadian American Mexican Income
Tax service help.
pert US Canada Canadian American
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David Ingram gives expert income
tax service & immigration help to non-resident Americans &
Canadians from New York to California to Mexico family,
estate, income trust trusts Cross border, dual citizen - out of
country investments are all handled with competence &
consultations are $450 for 15 minutes to 50 minutes (professional hour). Please
note that GST is added if product remains in Canada or is to be returned to
Canada or a phone consultation is in Canada. ($472.50 with GST for in person or
if you are on the telephone in Canada) expert US Canada Canadian American Mexican Income
Tax service and help.
This is not intended to be definitive but in
general I am quoting $900 to $3,000 for a dual country tax
$900 would be one T4 slip one W2 slip one or two
interest slips and you lived in one country only (but were filing both
countries) - no self employment or rentals or capital gains - you did not move
into or out of the country in this year.
$1,200 would be the same with one rental
$1,300 would be the same with one business no
$1,300 would be the minimum with a move in or out
of the country. These are complicated because of the back and forth foreign tax
credits. - The IRS says a foreign tax credit takes 1 hour and 53
$1,600 would be the minimum with a rental or two in
the country you do not live in or a rental and a business and foreign tax
credits no move in or out
$1,700 would be for two people with income from two
$3,000 would be all of the above and you moved in
and out of the country.
This is just a guideline for US / Canadian
We will still prepare
Canadian only (lives in Canada, no US connection period) with two or
three slips and no capital gains, etc. for $200.00 up.
However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms,
expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or
T5008 or T101 --- Income trusts with amounts in box 42 are an even larger
problem and will be more expensive. - i.e. 20
information slips will be at least $350.00
With a Rental for $400, two or three rentals for
$550 to $700 (i.e. $150 per rental) First year Rental - plus
A Business for $400 - Rental and business likely
$550 to $700
And an American only (lives in the US with no
Canadian income or filing period) with about the same things in the same range
with a little bit more if there is a state return.
Moving in or out of the country or part year
earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the first and $25.00
each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00
18 RRSPs would be $900.00 - (maybe amalgamate a
Capital gains *sales) are likely $50.00 for
the first and $20.00 each after that.
Catch - up returns for the US where we use the
Canadian return as a guide for seven years at a time will be from $150 to
$600.00 per year depending upon numbers of bank accounts, RRSP's, existence of
rental houses, self employment, etc. Note that these returns tend to be
informational rather than taxable. In fact, if there are children
involved, we usually get refunds of $1,000 per child per year for 3 years.
We have done several catch-ups where the client has received as much as $6,000
back for an $1,800 bill and one recently with 6 children is resulting in over
Email and Faxed information is convenient for the
sender but very time consuming and hard to keep track of when they come in
multiple files. As of May 1, 2008, we will charge or be charging a
surcharge for information that comes in more than two files. It can take
us a valuable hour or more to try and put together the file when someone
sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and
emails for instance.
This is a guideline not etched
in stone. If you do your own TDF-90 forms, it
is to your advantage. However, if we put them in the first year, the computer
carries them forward beautifully.
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Disclosure: To ensure
compliance with requirements imposed by the IRS, please be advised that any U.S.
tax advice contained in this communication (including any attachments) is not
intended or written to be used or relied upon, and cannot be used or relied
upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code,
or (ii) promoting, marketing or recommending to another party any transaction or
matter addressed herein.--
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denied. All readers should obtain formal advice from a competent and
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