Apply US capital losses to offset capital gain from Canadian equity

[Guest]

Here's my situation:
1) I'm a Canadian citizen. I own equity in Canada (TD mutual funds) which has increased in value.
2) I moved to the US 10 years ago. I pay taxes in the US, and not in Canada (non resident).
3) I have capital loss carryover in the US.

My question is, can I sell my Canadian equity which will trigger capital gains, and then use my US capital loss carryover to offset the gain so that I don't have to pay any taxes? If so, how would this work? When I sell my Canadian equity, TD will withhold a percentage (25%?) for non-resident taxes. In my US tax return, I would file that I paid foreign capital gains, but that I have capital loss to offset it. Will the IRS cut me a check for the 25% that TD withheld?

If the above is incorrect, what would actually be the outcome? What are my best options to minimize taxes?

Thanks!

[nelsona]

Why would TD withhold anything? You are a US resident, and thus are not subject to Cdn tax on capital gains. Presumably you held these when you left Canada (since you are not allowed to buy Cdn funds as a US resident.

[nelsona]

So, once you paid deemed disposition tax when you left Canada, you are no longer subject to cap gains on those items. You are only responsible for US cap gains, so any and all gains (except sale of real property) since you left Canada are taxable only in US. so you lump them with all your other investments, reporting gains and losses like any other investments you have.

[Guest]

Thanks Nelson. For my TD funds, I am still charged a "Non-Resident Withholding Tax" on my cash dividends. I'm not sure if they will withhold on capital gains (I assumed it would be treated similarly as the dividends). Why are they withholding if I shouldn't need to pay taxes in Canada?

[nelsona]

Dividends are not capital gains, and are indeed subject to Cdn NR tax (10%), which you use against the tax you pay in US on those dividends. These dividends are used to increase your cost basis, reducing your cap gains when you do sell.