capital loss carry over - David

QUESTION:
Have capital losses in Canada as Canadian resident. Left Canada an year ago,
now thinking about selling a house.
There will be some gain.
Will I get some gain shielded as a parimary residence? ( I lived in a house
before I left).
Can I use capital losses (that I got as a resident) against non-resident
capital gain on the house?
Thx
-----------------------------------------------------
david ingram replies:
Assuming that you claimed the capital losses when you were actually residing
in Canada, your assessment will show them on your last assessment from the
CRA.
If the house was rented while you were gone, you need to file a Section
216(4) Rental income to report the rent and of course, any rent should also
have been reported on schedule E of your US 1040 and whatever state tax you
file.
Some states are particularly fussy.  California and Massachusetts for
instance, insist that you also file the state schedule E with the state
return.
In any case, when you filed your "departing Canada" return, you should have
filed Canadian form T1161 if you left a house behind.  (also if you left a
mutual fund or stock portfolio or summer cabin or, or, or)
So the answer is yes, you may claim the prior losses against any gain on the
property since you moved out to move to the USA.
The gain must also be reported on your US return.  Note, however, Article
XIII (6) of the US Canada Income Tax Convention states that the value of the
house for US tax purposes is the value as you crossed the border in US
dollars.
For Canadian (not US) purposes, your house ceased to be a tax free principal
residence the second you crossed the border.  What I am referring to here is
that when you left Canada a year ago the US candy Dollar was likely about
1.25  and .80.  Today the exchange rate is closer to $1.10 and $0.91.
If your house was worth $200,000 Canadian when you left it was worth
$160,000 US.  Today, if you sell it for $200,000 Canadian, you are getting
$182,000 US and show a $22,000 US profit which is taxable on your US return
unless you claim it as your US primary home sale.  To claim it tax free (up
to $250,000 US per person) you have to have lived in it for 2 out of the
last five years.
-----------------------
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