This is a multi-part message in MIME format. ---------------------- multipart/alternative attachment Reply_To: My_question_is: Applicable to both US and Canada Subject: Tax Implications of Lot Sale Expert: [email protected] Date: Sunday July 04, 2004 Time: 10:39 AM -0700 QUESTION: We live in the United States but are Canadian citizens and will retire = on Vancouver Island. We purchased a lot last year with the intention of building within the = next three years. The builder may have a better lot available in which = case, we would have to dispose of the current lot and buy the new one. = The builder and his lawyer handle the transaction so no real estate = agent is involved. What are the tax implications when we flip the original lot which has = appreciated in value significantly? We have frozen all assets in Canada = at this time so my concern is that the generation of capital gains will = complicate US tax filing. =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D david ingram replies: 1. Your first tax liability is to Canada as 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 = withholding. http://www.ccra-adrc.gc.ca/E/pbg/tf/t2062/t2062-01e.pdf Filing form T2062 allows you to calculate the profit after deducting = legal and other costs of the purchase and any improvements to the = property such as a fence, septic field and tank, culvert fence, electric = hookup, etc. The CRA will approve the T2062 and give the purchaser (which is likley = the original developer in this case, to remit 25% of the profit rather = than the gross sale price. In April 2005, you will file the T1 return and pay a little more or get = a small refund back. 2. Then you (or us if you want us to look after it all) will convert = the Canadian figurtes to US dollars and put the amounts on schedule D of = your US return. Since you have made a profit, there will have been tax = paid to Canada and you will claim a foreign tax credit on your US return = by filling in US Form 1116. And yes, we can look after the Canadian, Provincial, US Federal and = State returns for you by email, snail mail, fax or courier. . = =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D= =3D=3D=3D=3D=3D=3D=3D=3D=3D=3D 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 Cartier = Partners and I will be hosting 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 www.600AM.com=20 Local phone calls to (604) 280-0600 - Long distance calls to = 1-866-778-0600.=20 Old shows are archived at the site. This from ask an income tax immigration planning and bankruptcy expert = consultant guru or preparer 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 gambling refunds = 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. income tax wizard wizzard guru advisor advisors experts specialist = specialists consultants taxmen taxman tax woman planner planning = preparer of Alaska, Alabama, Arkansas, Arizona,=20 California Denver Colorado, Connecticut, =20 Delaware District of Columbia Miami Florida,=20 Garland Georgia, Honolulu Hawaii, Idaho, Illinois, Indiana Des Moines Iowa Kansas Kentucky,=20 Louisiana Bangor Maine Maryland =20 Boston, Massachusetts, Michigan, Minnesota, =20 Mississippi, Missouri, Montana, Nebraska, =20 Nevada, New Hampshire, New Jersey,=20 New Mexico,New York, North Carolina, =20 North Dakota, Ohio, Oklahoma, Oregon.=20 Paris, Rome, Sydney, Australia Hilton Pennsylvania, Rhode Island, Rockwall,=20 South Carolina, South Dakota, Tennessee, =20 Texas, Utah, Vermont, Virginia,=20 West Virginia, Wisconsin, Wyoming,=20 British Columbia, Alberta, Saskatchewan,=20 Manitoba, Ontario, Quebec City,=20 New Brunswick, Prince Edward Island,=20 Nova Scotia, Newfoundland, Yukon and=20 Northwest and Nunavit Territories, =20 Mount Vernon, Eumenclaw, Coos Bay=20 and Dallas Houston Rockwall Garland=20 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] 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." 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 form province to province = as well. ---------------------- multipart/alternative attachment An HTML attachment was scrubbed... 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