capital gains tax for US citiizen with property

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I am a US citizen and have owned a small=20
house and property in Canada for about=20
12 years. If sold now I would realize a=20
capital gain of about 60,000 Cdn. Am I=20
obligated to pay a capital gains tax to both=20
the USA and Canadian government and=20
what would the approximate amount of=20
that be? If I must pay both governments=20
how does the tax credit work if there is=20
one? Thank you kindly.
david ingram replies:
Your first tax liability is to Canada if the property is in Canada.  You =
will calculate and pay tax to Canada on a T1 return with Schedule 3 =
filed to report the Capital gain. The purchaser will withhold 25% of the =
GROSS sales price unless you get a Form T2062 approved for reduced =
If the property was a rented property, you also need to file a T2062A =
with the T2062.
If the property was rented, you should have been filing Canadian returns =
under Section 216(4) Form T1 plus T776) to report the rental income to =
Canada and Schedule E to report the income to the US on your 1040 EVEN =
After paying the tax to Canada, you will calculate the gain again for US =
purposes and if there is a calculated tax (schedule D), you will claim a =
foreign tax credit for the tax paid to Canada on US form 1116.
Please note, that if they were rented, You will also have to repay the =
tax on any CCA (Capital Cost Allowance or depreciation) you have claimed =
against the rental income in Canada and would file a 4797 in the US to =
deal with the capital gain of sale of a business property.=20
Depending upon the profit, you can expect to pay a Canadian Tax of 11 to =
23% of the profit with 11% up to $60,000 of profit, three more rates up =
to $200,000  and 23% on any profit over $200,000 Canadian in one =
person's name.  The rate has minor variations from province to province =
as well.
If you do not send in the T2062 and T2062A forms (which are suddenly =
taking longer to process for some reason or other), the purchaser must =
withhold 25% of the gross sale price.  You will get a refund then when =
you file the tax returns.
And watch out about the rentals.  We just filed a T2062 for a British =
client who clearly told me that the property was not rented.  He did say =
they were selling it to friends who had stayed there many times but that =
it was not rented. The CRA phoned the purchaser to check on the sale and =
the "friends" told the CRA representative that they had been renting the =
house for several years.  "TILT".  The CRA is now demanding back several =
years of rental returns and does not need to allow any rental expenses =
for taxes or mortgage interest and repairs for more than two years back. =
 In Canada, the penalty for not reporting rental income to Canada is a =
minimum of 25% to a maximum of 44% of the gross rent with no expenses =
allowed.  (In the USA, the reverse penalty for a Canadian with a rented =
Condo is 30% of the gross rent with no expenses allowed).   And, I find =
it embarrassing to have filed an improper form.  It takes away from my =
credibility with the tax department.
When  filling in the T2062, real estate commissions may not be used in =
the calculation but can be when the actual return is filed so there is =
always an incentive to file the return.
And yes, we can look after the Canadian, Provincial, US Federal and =
state and city returns for you.
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, Fred Snyder of Dundee =
Wealth Management at 1764 West 7th in Vancouver - 604) 731-8900 and I =
host an INFOMERCIAL but LIVE talk show called "ITS YOUR MONEY"
Those outside of the Lower Mainland will be able to listen on the =
internet at
Local phone calls to (604) 280-0600 - Long distance calls to =
Old shows are archived at the site.
This from ask an income tax immigration planning and bankruptcy expert =
consultant guru or preparer  from or or = Canadian David Ingram deals daily with tax returns =
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income tax wizard wizzard guru advisor advisors experts  specialist =
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preparer of Alaska,  Alabama,  Arkansas,  Arizona,=20
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Texas  Taxman and Tax Guru  and wizzard=20
wizard - David Ingram's US/Canada Services
US/Canada/Mexico Tax Immigration & working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Calls accepted from 10 AM to 10 PM 7 days a week
Res (604) 980-3578 Cell (604) 657-8451
Bus (604) 980-0321=20
[email protected]
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 =
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