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My question is: Applicable to both US and Canada
QUESTION: Hello. I am a US citizen that invested in property in Whistler BC, Canada in 1997. There has been a capital gain since then, and i'm trying to plan for the event that I may someday want to sell it. My questions are (a) What is the tax liability calculation if I sold it today, (b) What if I wanted to sell it and buy something else in BC, and (c) What other kind of planning and creative efforts could I make now, to set myself up for minimal tax impact should I prefer to sell it a few years from now?? Oh, and finally (d) When and how would my tax in be Canada paid? Is it deducted from the sale? I've never filed any Canada tax returns, however I do pay the yearly municipality taxes. Thanks for your consideration in answering my question!
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david ingram asks:
Have you been renting this unit out?
If so, have you been reporting it on a Schedule E on your US 1040?
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From:
To: 'David Ingram at home - bus at [email protected]'
Sent: Tuesday, December 02, 2003 9:41 AM
Subject: RE: US citizen and resident owns a Whistler, BC, CANADA Ski Cabin - ask a Tax Guru
Thanks for the quick reply. No, I have not been renting it out thus far. On the US tax return, I have only listed the property and deduct property tax, etc.
(Per question (c), if it would be better to rent it out, I could.)
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a) the tax liability is roughly 23% of the profit up to $30,000 Cdn; 30% of the profit from $30,000 top $60,000 and 43% of the profit over $60,000. there are really f
differentiations but these are close enough for your purposes. We only tax 50% of the profit if it is a capital gain.
b) Canada does NOT have a section 1031 rollover as the US does. Therefore, you would pay tax as in (a) and have whatever was left for your next purchase.
c) I wish I had a magic formula for this. There is nothing you can do except keep meticulous records of whatever you have spent on the unit.
d) The purchaser who buys from a non-resident must withhold 25% of the gross sale price and remit it to the CCRA (Canada's IRS) when you sell. You can fill in a form T2062 to get this tax reduced if you can show clearly how much you will actually make. In that case the purchaser only withholds 25% of the actual profit.
Of course, renting it out would be to your advantage. If you are not using it, you might as well get some rental income out of it. There are at least thirty rental agents in Whistler who can help you out.
If you do, I would be glad to look after the Canadian AND the US returns for you.
David Ingram's US/Canada Services
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321
New email to [email protected]
www.centa.com 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 & the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent financial, or real estate planner or advisor & appropriately qualified legal practitioner, tax or immigration specialist in connection with personal or business affairs such as at 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 or www.jurock.com or www.featureweb.com. Canadian David Ingram deals daily with tax returns dealing with expatriate:
multi jurisdictional cross and trans border expatriate problems for the United States, Canada, Mexico, Great Britain, the United Kingdom, Kuwait, Dubai, Saudi Arabia, South Africa, Thailand, Indonesia, Egypt, Antarctica, 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, American and Canadian and Mexican and any of the 43 states with state tax returns, etc.
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another similar question will be as we lump them.
You may find more answers at www.centa.com
David Ingram of the CEN-TA REALTY Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
(604) 980-0321 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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