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Capitol Gains on inherited house in Canada (sic)


My mother had a trust deed done so that when she passed away, I inherited her house. I didn't live there. Her and I received some money in 2006 before she died for an option to purchase. Do I have to claim this as capitol gains? She passed away in June 2006. I sold the home in March 2007. Will I have to pay capitol gains on it next year? I already pay a mortgage on property I bought last July 2006.
David's reply:

If you own and live in another house, and mother's house was not rented out after her death, you have a choice of claiming mother's house tax free for the time from her death until you sold it or your own house tax free for the same time period.

It is likely easier to claim your own tax free because after paying selling costs, etc., there is not likely any gain on mother's house  particularly if there was an option to purchase price established befoe her death.

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Canadian selling a car in US

Hi Dave

I worked in Tacoma, WA from April 2006 till December 2006 on a TN visa. My husband continued to work in Canada and would come down there to visit me. While in Tacoma, we bought a car (mercedes benz). I have not imported it into Canada yet because of the high duties we would have to pay. We would like to sell it in the US to avoid having to import the car. I understand that since my TN is now expired, I have no rights to sell the car in the US. My husband is a Canadian landed immigrant and has a B1/B2 visa for the US. Can he sell the car in the US since it is under his name? The car still has Washington plates.

Thanks for your help!
David Ingram replies:

I know of no law that prevents either of you from selling that car in the USA. However, there is likely a problem with your accepting the cash although people do it every day.

Nothing to do with a TN gives you a different right to sell.

If you have it for sale, and are worried, hire someone to take the cash for you and have them deposit it in your bank account.

If you had a TN, you are a Canadian citizen.  Every time you cross the border, you have an automatic paperless B1/B2 status.  If you go down for business, it is a B1 status.  If you go down for pleasure, it is a B2 status. Canadians, as a rule, rarely get their B1/B2 as a piece of paper. �
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Moved to USA from Quebec


My husband and I just returned to the US this past Oct. 06. We already filed our US taxes but still  need to file our Canadian taxes. Both of us were on a work visa in Canada. Do you know of anyone who can help us file our canadian taxes in the...We are having a har time with the Quebec Taxes etc.

Thank you for your time.

david ingram replies:

That is what we do.  However, it is also unlikely that the US return is correct because you would usually have had to finish Canda first to determine Foreign tax credits unless you only had wages and used US form 2555 to exempt your Canadian earnings.

You are welcome to send us your Canadian income information but I would suggest that you should send the 1040 and State tax as well for us to look at as well.

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Rental Property in Arizona requires Rental 1040NR and 140PY or 140NR to be filed - Form 211 reward claim

My wife and I are Canadian citizens and own a rental property (house) in Arizona. 
Do I need to file income tax in the USA? Can we deduct the mortgage interest
and any expenses associated with the rental on our Canadian income tax return?
Thanks and regards,
david ingram replies

If you do not file a US 1040NR with Schedule E and Arizona 140PY or 140NR return, you face the likely Federal penalties of a $1,000 to $10,000 fine each per year for failure to report rental income as a non-resident plus 30% of the gross rent with no expenses allowed. 

That is for each of you if you both own the property.  And, I  have never seen a $10,000 penalty.

Then, you will EACH be assesed 30% of the gross rent with no expenses allowed.

(Canada's penalty of  just 25% of the gross rent with no expenses in reverse seems mild in comparison.)

FILE the US returns for every year you have missed.

THEN - There is NO responsibility for you to claim any rental expenses on your Canadian return.  You can claim them if you wish on form T776.  HOWEVER, you MUST report the gross rent on line 126 of your T1 if you do not claim expenses and the net rent if you do,.If there is a legitimate rental loss which has not been created by your using the unit personally, you can use the loss to reduce your other taxable income.

A Warning.  There is ample evidence that the IRS and CRA are pro-actively sharing information about these.  And, if you are in a complex and using the unit personally NEVER talk about the fact you have not filed a US tax return and don't ask a local.  I personally know of two people who make their living turning in Canadians who are not filing their US returns.  There is a 10% to 30% reward for turning you in by filing US form 211. See it at - click on forms, etc.

If you need help with this, you now know where we are.
david ingram wrote: --------------------------------------------------------------------------------------------------------------- David Ingram's US / Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
My Home office is at: 4466 Prospect Road
North Vancouver,  BC, CANADA, V7N 3L7
Cell (604) 657-8451 -
(604) 980-0321 Fax (604) 980-0325
Calls welcomed from 10 AM to 9 PM 7 days a week  Vancouver (LA) time -  (please do not fax or phone outside of those hours as this is a home office)   email to [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 and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at If you forward this message, this disclaimer must be included."

  Be ALERT,  the world needs more "lerts"   David Ingram gives expert income tax & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.   Phone consultations are $400 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or a phone consultation is in Canada.   This is not intended to be definitive but in general I am quoting $800 to $2,800 for a dual country tax return.   $800 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only - no self employment or rentals or capital gains - you did not move into or out of the country in this year.   $1,000 would be the same with one rental   $1,200 would be the same with one business no rental   $1,200 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.   $1,500 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out
$1,600 would be for two people with income from two countries

$2,800 would be all of the above and you moved in and out of the country.   This is just a guideline for US / Canadian returns   We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $150.00 up.   With a Rental for $350   A Business for $350 - Rental and business likely $450

And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.   Moving in or out of the country or part year earnings in the US will ALWAYS be $800 and up.   TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.   8891 forms are generally $50.00 to $100.00 each.   18 RRSPs would be $900.00 - (maybe amalgamate a couple)   Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.   Just a guideline not etched in stone. 
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US obligation for Canadian accounts


If you are a US resident for tax purposes, how do you treat Canada Savings Bonds?

Is there any recourse if you realized you held a Canadian financial account >$10,000 that you didn't report by June of that year?

Thank you.
david ingram replies:

Canada Bonds held by a Non-resident are not taxable in Canada. There is no 10% withholding.  They ARE taxable on Schedule B of your US 1040 however.

Holding accounts totaling over $10,000 leaves you liable for penalties of up to $500,000 PLUS 5 years in jail.

Pay attention to the two questions at the bottom of Schedule B.  Answer them truthfully and fill out an 8891 instead of a 3520 and TDF 90-22.1 forms for each and every Canadian account you have if the total is over $10,000. �
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selling former resident section 45(2)

My question is: Canadian-specific


Please help.

I bought a Calgary condo in Oct 2003, and lived in the condo until March 2005, when I bought my present house.

The condo was rented from April 2005 to August 2006, and I sold it in Nov 2006, at a gain.

My question: Would I qualify for the Principal Residence exception and be exempted from Capital Gains tax for the condo sale?


Best Regards,

--------------------------------------------------------------------------- __________________________________________________________________
david ingram replies:

I am too busy for this but hope you get something from the following:
>> Hi, 
>> Last year, we rented out our condo in Vancouver.  The
>> plan then was to have the rent cover our mortgage
>> payments for the 12 months that we would be away.  A
>> short term solution.
>> Now, we are planning to be away from BC for a longer
>> period of time (approx. 2 years) and wish to sell the condo
>> in the middle of the year, as we are unable to rent the
>> condo for any longer due to strata council by laws.
>> 1) If we sell the condo when there has been a tenant living
>> in it for 12 months, will we pay capital gains?
>> 2) What are our best options to avoid paying this tax?
>> 3) If capital gains would be owed, for how long would we
>> have to make the unit our principal residence again before
>> we can sell it and not pay CGT?
>> Thank you,
david ingram replies:
If you filed a section 45(2) election with your first year's rental, you 
can rent the condo out for up to 4 years (plus 1 in the calculation) 
without incurring capital gains tax if you have not bought another 
residence that you are living in.

If you have bought and lived in another house, you have to choose one or the other as your tax free residence for the time you owned both.

 See Below:
  My question is: Canadian-specific

QUESTION: Dear Mr. Ingram,
I bought a house in the December of year 2000, lived there till the end of December 2000 (3 weeks) and started to rent it out on January 1, 2001. I filed the election 45(2) to claim the house as my primary residence for years 2001, 2002, 2003 and will do it for 2004.
I do not claim a depreciation for those years.
I want to sell the house now. Do I need to move in house first in order to avoid the payment of the capital gain taxes. For how long I have to stay there to be eligible for not paying the capital gain taxes on sold house if I need to move in.

Thank you in advance for you help,
david ingram replies:    First I am going to repeat your old question from last July and my answer.   My question is: Canadian-specific

QUESTION: Hi, David!
I would like to know is it possible to use the election under the section 45(2) again if the old house is sold and the new one is bought. Can it be used unlimited number of times by the condition that it is used for each house only once.

Thank you  
David Ingram replies:   Section 45(2) is intended to allow people to try something out.  This means that if you move to a rented condo for a couple of years and rent your house out, you can move back into the house without suffering a capital gains tax under section 45(2).   Since it was passed on June 17, 1972, (32 years ago now) I have never seen it used more than twice by one person.   Does not mean it has not been used more than twice in thirty years, it just means it is unlikely.   There is no numeric restriction but if you are moving in and out of houses, the CRA will treat you as a trader and tax you at full rates.   ---------------------------------------------------------- Now, to answer this question.  Section 45(2) is NOT something you can plan to use.  In other words, your living in the house for three weeks and renting it out and filing a section 45(2) election does NOT make it tax free if you bought the house to rent and not to live in as your personal principal residence.   Your question indicates to me that you are trying to beat the system and did not buy the first house to live in and unless you can show the tax office that you moved every stick of furniture in and really intended to live there, the CRA will not allow it to be sold tax free.   This year, a new policy of the CRA is that they wish form T2091 to be filed with every tax return where a personal house was sold during the year.   If it was your residence and you genuinely intended to live there and were transferred of suddenly got married or could not stand your neighbour or lost your driver's licence or suffered some other disaster that caused you to "HAVE TO" move suddenly, filing section 45(2) will make it tax free provided you did not also own another house that you did live in.   If you did own another house that you actually lived in, claiming the house you have filed the 45(2) election for as tax free, will MAKE THE HOUSE YOU ACTUALLY LIVED IN TAXABLE.   If you have a genuine 45(2) election, you do not need to move back in.  If it is not a genuine 45(2), moving back in will TRIGGER a tax bill as you move in.   You need a consultation with someone who knows the rules before you make a mistake. I am available in person or by phone at a fee of $350.00 minimum for an hour but not until November now.   As many know, I charge this for US / Canada tax an immigration advice as well.  I am not alone though.   If you have a tough US immigration question to ask or one that  I cannot deal with (remember I do Immigration AND tax) Joe grasmick is the place to g for a telephone consultation.  HIs fee is $295.00 per HALF hour and you can get hold of him at   I have sent two out of town people to him in the last month where it was obvious to me tha tthe people needed a lawyer as opposed to a consultant..
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US taxes on Canadian Old Age pension benefits


In 2006, my mother received less than $600 (Canadian) in old age pension benefits from the Canada Revenue Agency.  They did not issue her any form 1099-R (only the NR4-OAS) and I am not sure how to account for the income on her tax return (I am preparing her taxes this year).  She also receives US Social Security benefits but has little other income and has no tax liability.  She has not lived in Canada for 50 years or so. _______________________________________________________
david ingram replies:

Strangely enough, the US government would not issue a NR4-OAS and the Canadian Government would never issue a 1099-R because they are both forms issued by a sovereign nation.

The NR4-OAS should be converted to US dollars and added to the amount of Social Security she received.

If her total income is low enough, none of it will be taxable.

As a guess, I would say that your mother moved to the US when she was  22 or 23 and is 72 or 73 now. �
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CPA questions Canadian will with deceased attorney

My father lives in Toronto and I live in the US. He was told that because the attorney that drew up his will has passed away, that in order for the will to be valid he will need to see another attorney to draw up another will. I am an only child, mother deceased, his only heir. It is a simple estate: deposits and auto, no real estate. Is someone just trying to get more money from him or this true? Really appreciate your help.
david ingram replies:

Wills law differs from  province to province and from  state to state.

I am not an attorney, lawyer, barrister or solicitor but unless the rules have changed, the lawyer who drew the will up being alive  has never been a rule that I know of and I did have offices in 30 states and five provinces including Ontario.

To be valid, an Ontario will must have two witnesses who are not beneficiaries.

If the will is verrrrry old, it should maybe be revised or relooked at, but even that would be unusual if you are the sole beneficiary.

In fact, if he wanted to put the deposits in joint tenancy with right of survivorship and the car is a $5,000 car, there would not be any reason for him to have a will. If it is an expensive car, even the car can be registered in joint tenancy.

Note that I do NOT recommend that he do this because you might run away with the money but it is a simple solution that many parents have with their children.

And, since the question refers to a 'CPA' questioning the will, I think that it is a US CPA that has told this to you rather than  someone telling your father,  n'est-ce pas? �
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US / Canada Income Tax Returns what forms needed

Hi David,

I was reading your e-mails and saw this one. Could you tell me which forms that we could fill out to possibly some some money and time? We have a small business in Canada ,husband is a dual US/Can. citizen, I am canadian. We live together in the US where Rodger works full time and I do not work. We have Canadian and US investment income. Would forwarding last year's tax returns help? How do we go about applying for a US extension as we will not get everything to you in time?



david ingram replies:

The CRA asks for the information you will find on Form T2124 for the business - print out

and try and fit as many numbers as you have into the lines on that form.  The closer you come to those categories, the better.  The less  numbers I have to sort or add together, the  smaller the preparation charge.

You will note that this form also  has specific breakout spots for a claim for an office in the home and motor vehicle expenses.

These same numbers will them be converted and go onto US form Schedule C.

For the US, I need the year end figures for Dec 31 2005 and Dec 31 2006 for any Canadian RRSP accounts you have. These go on Form 8891 which you will find at

Assuming the total of all your financial accounts in Canada is over $10,000 US, you also need to fill in forms T D F 90-22.1

which you can see at

If your accounts total over $10,000, I need the

Name of the Financial Institution,

Holder of the account - You , Rodger or joint

Account number

Highest balance in 2006 (not necessarily or likely to be  December 31st)

For the rest I need any:

*    bank information slips from Canada. T3, T5, NR4, 5013 slips.
*    bank information slips from the US. 1099 Misc, 1099-Div, K-1, 1042S
*    Rodger's W2 slip or 1099-Misc

anything else that you think might be relevant.

A copy of the 2005 US and the 2005 Canadian and 2005 State return if in a tax filing state.

For an Extension 'You' or us will need to file the simple US form 4868 which you will find at:

From: US / Canada Income Tax Help - CEN-TAPEDE <[email protected]>
Reply-To: [email protected], [email protected]
To: CENTAPEDE <[email protected]>, jurock <[email protected]>
Subject: US USA / CANADA Income Tax Help - Here is a price list - sort of - Quote during the busy season- David Ingram gives expert income tax & immigration help to non-resident Americans & Canadians from New York to California to Mexico family, estate, income trust trusts Cross border, dual c
Date: Wed, 28 Mar 2007 19:46:31 -0700
>[email protected]: Please see bottom of message if you wish to unsubscribe.

Hi David

First question is whether you will be taking additional clients during this hectic season.

I am interested in your services and would love to get a quote for your services

The situation:

I am a unmarried US-Canada dual citizen living in Canada (Vancouver) with my parents (no rent).
I graduated from university last spring and I now run a Sole proprietorship in Computer Consulting full time from home.
I have both a GST and PST number though none of my clients have been from Canada.

My main client is from the United States and are paying me as a consultant.
I have also helped several individuals from around the world (none in Canada) with smaller jobs.
If you require more information to make your assessment please let me know.
Please let me know if you can take this task and send me a quote for tax preparation.
Please also let me know which documents are required.

Even if you are unable to help me this year I would still love to receive a quote if it is for the following year.

david ingram replies:

You were rejected by the system as just one of too many emails today.

However, baring a major catastrophe with our staff and associates, I see no reason that we could not look after you this year. 

As a US citizen, you have to file a US return whether you work in the US or not.  All we have to sell is our a time.  The better prepared you are, the less the charge for preparation.  It would help if you had the totals asked for on Form T2032 (available at CRA website).  The Instructions for the form and self-employment in general are at:  I have asked for this form because you are based in Canada.    If you were based in the USA, I would suggest that you have the figures asked for on Schedule C - Read the instructions at

In either case, we have to convert the currencies and fill in both forms to do the dual country returns.
With the US return and self-employments involved, you would be looking at $800 to $1,600 I expect.  a  Price list suggestion is included in the following.

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Living in Canada, working in the US

Good day,
You have undoubtedly been asked this question on numerous occasions.  My wife works in the United States, but we reside in Canada.  She recently has become a permanent resident in Canada, but has yet to receive a SIN.  We know she must file a tax return in Canada (under the deemed resident statute) however since she does not earn an income in Canada, and her salary is in US$ what amounts do we fill on her Canadian income return??  Can my salary (which is less than hers) somehow be applied on her return as well??  Does she as well get a 2 month extension on her US return date in order to file her Canadian return??
Thank you for your time a nd consideration.
Best regards,
> david ingram replies:
> If you are commuting to work in the USA, you must file a US tax return first and then refile the same amounts in Canada.  You would convert the US earnings to Canadian dollars and put the amount on lines 104 (not 130) and 433 (schedule 1) of your Canadian T1 return.  You then claim the Federal tax, State tax, FICA (social security) and Medicare  paid to the US as a foreign tax credit on line 431 of your Canadian return.  If there is anything left over you can apply it as a provincial foreign tax credit on line 48 of provincial form 428 after filling in form T2036.  (If you are in Quebec, You would use Quebec form TP-772-V to calculate and put the credit on line 409 of your TP1.
> She should file US form 4868 to extend her time to file the US return which is due at midnight April 17th otherwise and, of course, her Canadian in due April 30th.
> You know where we are if you need help.
> She will get a little more by going to and reading the US/Canada Taxation section in the second box down on the right hand side.