unpaid amount under HBP in Canada

[canadian]

Hi there,

I was a resident of Canada only for January 2005 and resident of US for the entire 2005.
I have unpaid amount under Canada's HBP. According to "Emigrants and Income Tax guide" I should include unpaid amount in my income for the year I emigrated.

My question is:
Do I have to include unpaid HBP amount as my income for US tax return as well? And if yes, could I deduct any tax paid to Canada on this sum?

[nelsona]

You are correct that unless you repay the amount to your RRSP, you must include the unpaid HBP your Cdn departure return.

This amount does not meet any definition of US income however, so it is a not declareable US.

The tax you pay however is creditable against your Cdn income that you report on yor 2005 return.

Or, since you are paying the extra tax in 2006, you could simply use it as a deduction on your 2006 return next spring.

The foresign tax credit has to be ties to specific income. However the foreign tax deduction does not (but iyt can only be a deduction in the year you actually pay it).

[one_day_at_a_time]

As an emigrant (to the US) in 2007, I have included the unpaid HBP amount in my income for the year on my Cdn Tax Return. The result is tax owing, which, of course, I will pay when I submit my return. And in effect, then I can take a foreign tax deduction against my 2008 US tax return?

[nelsona]

Yup. Good strategy.

[one_day_at_a_time]

Can you tell me on what form and/or line would Iinclude this paid tax (for the sake of argument if the US '08 return does not differ from the US '07 return)
Thanks

[one_day_at_a_time]

[quote="one_day_at_a_time"]Can you tell me on what form and/or line would Iinclude this paid tax (for the sake of argument if the US '08 return does not differ from the US '07 return)
Thanks[/quote]

I found my answer.

[nelsona]

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