Moved to U.S., selling Toronto home

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

Post Reply
nelsona
Posts: 16664
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Obviously given the nature of your transaction, a real estate lawyer would best be involved.

But just to deal with how you will ultimately be taxed:
For, I'm assuming you have completed your 2016 departure tax return, making it clear that you departed in Sept 2106.

In Canada, since you left Canada less than one year ago, you will not owe any Cdn tax on the sale, because the formula for determining gains allows you to add 12 months to your actual time spent as principal residence.

In US, IRS allows you 3 years after moving to sell a former home -- which you did not subsequently rent out -- without owing cap gains tax.

So, you are in the clear fro ma tax point of view.

As to your non-residence compliance, if they are correctly filed early enough, you (actually the buyer) should be absolved of any requirement withholdings. In any event, those forms should only include your half of the sale. If there were withholding, it would be based on (a) the purchase price and (b) the entire gain, so there is no need to get an appraisal for these purposes.

If the sale was to be much farther down the road (>1 yr for Canada, >3 yr for US), you would need a Sept 2106 FMV appraisal to establish the tax basis at departure from Canada for Cdn and/or US purposes
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
nelsona
Posts: 16664
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Just to clarify the US taxation. US would not tax you if sold in first 3 years after you left, only if you make less than US$250K on the house (your portion). I suspect that your house made more than $500K overall, so you may be on the hook for some US tax.

However, the treaty allows you to specifically exclude gains made before you left on the property, no matter how large, so if you are making more than $250K on the sale, it would be agood idea to get a sept 2016 appraisal. you would also want to go back and document anuy large capital expenses you made on the property to raise its ACB for US purposes., if that is needed to reduce the gain.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
nelsona
Posts: 16664
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

the IRS has rules on what is an eligible capital cost, I suggest you look those up (you only have to file next spring).

As I said, this only applies on your US tax return, and only if your house gained over US$500K since you owned it, or gained more than your half of the selling costs since you moved out. That would be the first steps I would look at.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
Post Reply