Cost Basis on a US Residence/How is Gain determined?

[Mswalleye2]

Hello .. Hubby US Citizen moved to Canada 2005. He had a residence in WI .. we kept it and used it for personal use while his mom was alive .. she has now passed on. We just sold the property. I know how to figure out cost basis for USA taxes - he built the place BUT ... is the gain in the USA the gain I use for Canadian tax purposes or is the gain for Canada taxes ... the difference between value of the home when he moved to Canada and selling price?

I was also trying to understand the "personal residence exemption" and am wondering if this might apply to this residence as we did spend time at the house throughout the years ... months at times.?

How do I properly report this on our tax returns?

thanks

[nelsona]

For Cdn purposes, the gain is based on the value (in 2005 USD) when he arrived in Canada vs. the proceeds of the sale (In current USD).

For there to be a primary residence exemption with IRS, it would have to have been his home 2 of the past 5 years. Even if he stayed there a lot ,that would be difficult to call it his home.
For Canada, he could make it his primary residence for the years since he moved to Canada but this would prevent him from using those years towards the Primary residence exemption on your Cdn home. You may have already used these year if you sold a house since 2005, anyway.

Since there will be tax on the property in US, there wouldn't be any advantage to using the PR exemption in Canada, since he will get credit in Canada for the US tax.

The problem may be getting an accurate valuation for 2005.

[nelsona]

Just to clarify, when I say "in 2005 USD", I mean "in CAD based on the 2005 USD/CAD exchange rate" and "current USD": "CAD converted from USD when sale occurred".

[Mswalleye2]

Thanks for clarifying this for me.
Do you know if they would accept his tax bill .. which shows assessed and market value?
tks

[nelsona]

maybe