How to transfer money to US after selling home in Canada

enthusiast · Post by **enthusiast** » Tue Sep 20, 2011 11:32 am

Hi, I am a Canadian in US on TN for the last several years. Just recently, I got my GC and am planning to buy my first home in USA. I have a property in Canada (currently rented out) which I am planning to sell and use the funds to buy the house here in the USA. Is there a simple way to bring the money to USA? How would I be able to declare that money without raising any flag?

thanks!

nelsona · Post by **nelsona** » Tue Sep 20, 2011 12:07 pm

I answered your question on canuckabroad.

I'll be happy to discuss the tax issues here.

nelsona · Post by **nelsona** » Tue Sep 20, 2011 4:03 pm

Once you left canada, you have one year to sell house before Cdn tax is due on sale. You had 3 years before US tax would be due on sale.

The formula for the gain in canada is (H+1)/T, where H is the years it was your home, and T is the total years you owend the home. You can also choose to make the gain the total since you left canada, if that is less.

The formula for US, is the gains since you made it a rental, or the gains since you left canada which ever is less.

enthusiast · Post by **enthusiast** » Tue Sep 20, 2011 6:03 pm

Could plz clarify that a bit. For instance, a person stayed in Canada for 2 years in his property that is 5 years old and made a profit of 100k, how would the capital gain be calculated on that?

nelsona · Post by **nelsona** » Wed Sep 21, 2011 6:52 am

My formula was a littler off it should state gain would be [T - (Y+1)]/T
Canada: gin would be 100K *[5-(2+1)]/5 = 40K.
For US it is the gain since you switched the property to rental, plus depreciation recapture.

You need to know how much the property was worth when you left.

enthusiast · Post by **enthusiast** » Wed Sep 21, 2011 8:27 am

Thanks! Is there a link to get more info about the US taxation in a similar case. In my case, the property increased in price around 30-40 K after renting the place. Does it mean, I have to pay capital tax on 30-40 K in the US in additional to that of Canada?

nelsona · Post by **nelsona** » Wed Sep 21, 2011 9:53 am

It's not in addition. You would be able to use the Cdn tax as a credit ,using form 1116.

You will need firm number for FMV on date you moved to US.

have you been properly reporting rent and depreciation on your 1040? If you have you should be familiar with your cost basis.

IRS publication 523 and 527. The treaty has a provision that limits cost basis to no less than FMV at time of move to US.

enthusiast · Post by **enthusiast** » Wed Sep 21, 2011 2:45 pm

Thanks Nelsona for the insight.