Sale of principal residence in Canada

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galbraith_steven@yahoo.ca
Posts: 2
Joined: Mon May 07, 2018 4:28 pm

Sale of principal residence in Canada

Post by galbraith_steven@yahoo.ca »

Hello all. We are Canadian citizens in the U.S. on an L1 and L2 Visa. My husband started a new job in Hawaii on his L1 in Jan 2017. I stayed in Canada and sold our principal residence there in April 2017. I joined him in Hawaii shortly thereafter on my L2. Neither of us is officially a permanent resident in the U.S, although we have applied for permanent residency status now. We purchased a house in Hawaii in June 2017 and took possession in August 2017. We are being told that because he worked and resided in the U.S. at the time of the sale of our home, he is subject to capital gains tax on the proceeds from our house sale both federally and state. There is no capital gains tax on sale of principal residence in Canada. Is there any way of avoiding paying this? Appreciate any insight on this.
nelsona
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Post by nelsona »

The US/Can treaty protects you from pre-arrival gains on your principal residence.

May I ask who is "telling" you this, as they are clearly not knowledgeable on these matters.

Besides, even if it were taxable, you each get $250K exemption on the gains, and that applies to both fed and state tax.
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
galbraith_steven@yahoo.ca
Posts: 2
Joined: Mon May 07, 2018 4:28 pm

Post by galbraith_steven@yahoo.ca »

But my husband was already here and had been for almost 4 months when our house in Canada sold. I came after the house sold so my half of our gain is fine and not taxable but he is being subjected to the capital gains tax on his portion and even with the $250000 exemption the bill is large. The person is a CPA but I don't believe she is very experienced with cross border so am doing my own research in the hopes of finding a loophole.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Please reread what I said.
You are both exempted on the value of the gain made before either of you arrived in US.
Surely the gain on his half of the property, between January and April was not $250,000. And whatever little gain there might have been would be wiped out by real estate fees.
You really have nothing to worry about.
So the “loopholeâ€￾ is what I told you: us Canada treaty article XIIi.6

By the way, even though you only arrived in April, it will be far better for you to file full year in US, joint with spouse.

You should also be filing departure return in Canada. Did your husband report tease of his half of home as a non-resident of Canada, with special forms?
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
nelsona
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Post by nelsona »

tease = the sale
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
ferykusuma
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Joined: Tue Nov 22, 2022 12:17 am

Re: Sale of principal residence in Canada

Post by ferykusuma »

Gracias
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