T2062 & Tax on sale of Canadian property

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navb
Posts: 17
Joined: Tue Jul 21, 2015 10:56 pm

T2062 & Tax on sale of Canadian property

Post by navb »

I bought a house in canada in 2009 for 200K and moved to the us in 2010. I am now selling my house (just got an offer) for 300K. I had spent 10k on renovation on the house in 2011 and i just got a retrospective appraisal done on the house for when i left and it was 240K.

I have a few questions in this regard -

- should i file for T2062 now or wait until closing of the deal?
- how do i calculate 25% tax that I need to give to CRA at the time of submitting the form T2062 - would it be 300K-(240K+10K) *25/100= 12.5K or it would be 300K-(200K+10K) *25/100= 22.5K or something else.

Thank you in advance!
Nav
navb
Posts: 17
Joined: Tue Jul 21, 2015 10:56 pm

Post by navb »

Would someone please help and provide guidance.

Thanks
nelsona
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Location: Nowhere, man

Post by nelsona »

You have 2 options on how to determine your taxable gains.

The form you file now will determine your withholding, You will still need to file a non-resident return at year end to get the exact tax.

You will also need to report the gains since you left on your 1040, and take credit for the Cdn tax.
I will outline the 2 methods later.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
navb
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Joined: Tue Jul 21, 2015 10:56 pm

Post by navb »

Thanks for your response
nelsona
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Post by nelsona »

Two choices for canada:
1. Pay tax on the gain from the day you left Canada. This is your only choice for US.
2. Calculate tax oon the entire gain, using this formula:

GAIN *[1- (months principle residence +12)/(months owned property)]
You get an extra year of principal residence credit.

How reliable is your retro evaluation, as this is quite important for both countries.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
navb
Posts: 17
Joined: Tue Jul 21, 2015 10:56 pm

Post by navb »

Thank you for your reply.
navb
Posts: 17
Joined: Tue Jul 21, 2015 10:56 pm

Post by navb »

Hello,


Could you please advise what supporting documents I would need to send in along with the form T2062 in my situation i.e. selling a house which use to be prinncipal residence 6 years ago but now is a secondary home when I visit Canada.

Thank you!
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

The instructions for T2062 provide a detailed list of what documents you need. Start with T2091. Your accountant/broker/agent/lawyer can help you with this.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
navb
Posts: 17
Joined: Tue Jul 21, 2015 10:56 pm

Post by navb »

Hi Nelsona,

If I did not fill the form T2061 at the time I left the country, can I still use the FMV to calculate the capital gains for Canada tax purposes or I need to go with the option 1 you suggested, I do have retro appraisals for when I left the country but not sure if i can use it for calculations.

Thanks
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

You can do a retro appraisal.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
navb
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Joined: Tue Jul 21, 2015 10:56 pm

Post by navb »

Thanks you,

I have a retro appraisal from 2 realtors along with comparable property sales for that time, I am hoping that will suffice in lieu of the form T2061
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Should be fine. Remember that for US purposes you will be taxedon the gains after departure from Canada.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
navb
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Joined: Tue Jul 21, 2015 10:56 pm

Post by navb »

Thank you very much!
navb
Posts: 17
Joined: Tue Jul 21, 2015 10:56 pm

Post by navb »

Hello Nelsona,

I have a few questions regarding filing of Canadian taxes for a property I sold late last year. I received the compliance letter from CRA and have paid the 25% of the gains from the sale of property. I am now looking to file the 2015 taxes. It is my understanding that I have to file Schedule 3 and send along with a copy of the compliance certificate. My questions are:

- I understand that I can include expenses & outlays on Schedule 3 (Capital Gains), but is there anywhere I can include principal residence exemptions that I had indicated on T2062.
- Besides schedule 3, which other form do I fill out. With Schedule 3 I can calculate the taxable capital gains, but it doesn’t tell me what the taxes owing are

Please advise.
SM
Posts: 94
Joined: Fri Mar 20, 2015 3:43 pm

Post by SM »

Hey navb,

I’m no expert, but my understanding is as follows. You need a T1 General non-resident return, T2091 (for the principal residence exemption) and schedule 3. As you mentioned, you can now include the expenses on schedule 3 that you could not include with the T2062. The 25% from the T2062 should go on line 437. Also, if you completed a T2062A for depreciation (CCA) and had recapture, it must go on it’s own S.216 return along with the 25% tax you paid with the T2062A. Write S.216(4) at the top of the return before you send it to CRA.

You will likely pay 15% federal tax and a 48% surtax. Initially the tax on the non-resident T1 General should match exactly what the tax you paid with the T2062 and then it will be adjusted downwards after you add your selling expenses.

Nelsona will let us know if we missed anything.
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