I am a Canadian citizen and US green card holder but non resident of Canada.
I want to buy a house in Canada for cash. My son is Canadian citizen who lives in Canada.
I have two options.
1) I give full amount of purchase price as cash gift to him. I declare that amount towards lifetime maximum of $16M on my IRS return.
2) I buy home jointly with him so that he owns as inheritance after me.
Which of the two options is better and why?
Canadian non resident citizen Buying a joint ownership house
Moderator: Mark T Serbinski CA CPA
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NewCanadian
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Re: Canadian non resident citizen Buying a joint ownership house
The simplest would be to give him the money and HE buy it for him outright now, since either way you would need to declare the gift. Also, that way you have no future income to report when it is sold.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Re: Canadian non resident citizen Buying a joint ownership house
RE: The simplest would be to give him the money and HE buy it for him outright now, since either way you would need to declare the gift. Also, that way you have no future income to report when it is sold.
That is incorrect on a number of accounts. First, the facts are his presented choices are a cash gift of the ENTIRE VALUE of the house OR to buy jointly with son where Dad gifts ONLY 50% of the the ENTIRE VALUE of the house. That makes it wrong to say "either way you would need to declare the gift', with 'the' meaning the gift value is same under either choice, when that isn't true.
Declaring the gift under one choice is 50% of the the ENTIRE VALUE of the house and under other option the ENTIRE VALUE of the house. If Dad dies, son inherits house at FMV at death as basis and no gain on immediate sale at that FMV - on dad's 50% basis. So, besides estate tax, gotta think about basis, later sale and gain and for who this was a principle residence. There is no IRS tax on a principle residence to the inheritors of the deceased. Cdns do not pay any tax on sale of principle residence. There would be CG tax to USC portion on sale of their % owned less than 250k of gain, unless it was also a principle residence of the deceased whereby no capital gain. A proper analysis needs to work thru all scenarios and consider said points and also get the facts straight.
That is incorrect on a number of accounts. First, the facts are his presented choices are a cash gift of the ENTIRE VALUE of the house OR to buy jointly with son where Dad gifts ONLY 50% of the the ENTIRE VALUE of the house. That makes it wrong to say "either way you would need to declare the gift', with 'the' meaning the gift value is same under either choice, when that isn't true.
Declaring the gift under one choice is 50% of the the ENTIRE VALUE of the house and under other option the ENTIRE VALUE of the house. If Dad dies, son inherits house at FMV at death as basis and no gain on immediate sale at that FMV - on dad's 50% basis. So, besides estate tax, gotta think about basis, later sale and gain and for who this was a principle residence. There is no IRS tax on a principle residence to the inheritors of the deceased. Cdns do not pay any tax on sale of principle residence. There would be CG tax to USC portion on sale of their % owned less than 250k of gain, unless it was also a principle residence of the deceased whereby no capital gain. A proper analysis needs to work thru all scenarios and consider said points and also get the facts straight.
Re: Canadian non resident citizen Buying a joint ownership house
A non-resident, like this father, CANNOT have a PR in Canada, so that issue is moot. As I said, either way this would be a gift, regardless of amount. I didn't say it was the SAME gift.
He is looking for the simplest way to give his some a house.
He is looking for the simplest way to give his some a house.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Re: Canadian non resident citizen Buying a joint ownership house
As Carson -- who IS a pro -- suggests, don't overcomplicate matters.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Re: Canadian non resident citizen Buying a joint ownership house
Totally unnecessary comment. and again incorrect. I am a licensed CPA tax pro
Re: Canadian non resident citizen Buying a joint ownership house
Yes, I know you are. Just mentioning what a fellow pro has told you.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Re: Canadian non resident citizen Buying a joint ownership house
and as I replied to that post, Carson was wrong to make that comment too. Actual real life clients were denied FTC by CRA for not filing 1040NR to report correctly wh 15% div. Carson is overcomplicating taxpayers' lives by advising them to ignore my advice to file to avoid CRA hassle. I've been practicing for 30 years now and have been around the block. I am the first advisor to grab any opportunity to lessen a taxpayer's filing obligations. When I advise something, it's for good cause, same as when I advise not to do something.