Tax on House in BC for US A residents Ask an

I own a house in British Columbia.  (Purchased in 1986 for $87,000 Cd $)
It is now worth about $300,000 Cd$.
If i sell it what are the tax ramifications?  I rented it for awhile 1987 to
1991.  Rental income was about $20,000 Cd.
Would i owe both Cd and US taxes if I sold it?    If so, how much to each
I have made improvements to  the house that have cost me  $40,000 Cd.
Kitchen remodel etc.
If i kept it and willed it to my children are they subject to taxes?  I have
a living trust and all of our assets  will
go to our children when we die.  What happens when either I or my wife dies
and we still own the Canadian property?
Thank u.
Forgot to tell u I am an American and my wife is a Canadian with green card
and has been living is the US for 47 years.
david ingram replies:
Assuming that you paid tax to Canada or at least filed returns for the years
it was rented out, there would be no tax on the $20,000 rent.  If you did
not file tax returns for those years, you would owe $5,000 tax plus interest
and penalties and that would likely be $14,000 by now.
As far as the tax to Canada goes, you would have to take the  $300,000 -
87,000 -40,000 to come out with a Canadian Capital Gain of $173,000 or
$86,500 each for you and your spouse.
In turn, that $86,500 would be cut in half and you would each owe tax to
Canada on $43,250 because Canada taxes 50% of the Capital gain at normal tax
rates as opposed to the US which taxes the whole capital gain at a reduced
tax rate.
The tax rate for 2003 would have been $11,223.94 Canadian each.
Tax would be about the same in the US but you would claim the tax paid to
Canada as a foreign tax credit and should not actually have to pay any tax
to the USA because of form 1116.
Glad to look after the returns for you when ready.  We can do the US, state
and Canadian returns at the same time.  For a US accountant to figure out
the foreign tax credit for the first time, he or she might take 5 hours.  If
you are tied into a specific accountant, we will prepare a dummy US return
with the Cdn sale and foreign tax credit plugged into the US return in such
a manner that you US accountant just has to plug in four or five figures in
the places designated.
You do NOT want to train a US accountant on your return.
Hope this helps.  Tell your wife (politely) that david says to get her US
citizenship ASAP.
Dozens of good reasons.
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