We are planning to move back to Canada this year after being in US for about 3 years on H1B.
My concern is the condo we bought in US for about 1 and half year ago.
Since the housing market is not so great these days (due to sub-prime mortgage), we thought it would be better to rent it out for a couple of years before selling it and moving our entire assets back to Canada. What would be the tax implications on rental house in US for a non US resident? Also, let's say we sell the property in a couple of years, how are my captial gains (if there are any) taxed and treated in both US & Canada?
Thanks,
Canadian having a rental property in US
Moderator: Mark T Serbinski CA CPA
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dhirenasha
- Posts: 57
- Joined: Fri Nov 23, 2007 9:31 am
- Location: USA
Not an expert but here are my 2 cents. This is my personal view....
Your underlying assumption that the value of the property is going to go up in couple of yrs, does not convince me. In coming years the value of property is going to go south, therefore this would be the right time to sell it. Agreeing or disagreeing is up to you....Hope I could see the future...
Your underlying assumption that the value of the property is going to go up in couple of yrs, does not convince me. In coming years the value of property is going to go south, therefore this would be the right time to sell it. Agreeing or disagreeing is up to you....Hope I could see the future...
Re: Canadian having a rental property in US
[quote="Nam"]We are planning to move back to Canada this year after being in US for about 3 years on H1B.
My concern is the condo we bought in US for about 1 and half year ago.
Since the housing market is not so great these days (due to sub-prime mortgage), we thought it would be better to rent it out for a couple of years before selling it and moving our entire assets back to Canada. What would be the tax implications on rental house in US for a non US resident? Also, let's say we sell the property in a couple of years, how are my captial gains (if there are any) taxed and treated in both US & Canada?
Thanks,[/quote]
As the previous poster mentioned, you have a market decision and a tax decision. Having owned 2 rentals myself, unless you have profit potiential in the rental as well as the value, the market decision trumps the tax decison. On the tax side, you will be required to depreciate the property in the US resulting in a paper loss- something which the CRA does not allow as capital cost allowances are only allowed only to the extent of profit. That means you will track two basis values till you sell the property . Your ongoing loss claim in the US may not help. Nelson can fine tune Im sure
My concern is the condo we bought in US for about 1 and half year ago.
Since the housing market is not so great these days (due to sub-prime mortgage), we thought it would be better to rent it out for a couple of years before selling it and moving our entire assets back to Canada. What would be the tax implications on rental house in US for a non US resident? Also, let's say we sell the property in a couple of years, how are my captial gains (if there are any) taxed and treated in both US & Canada?
Thanks,[/quote]
As the previous poster mentioned, you have a market decision and a tax decision. Having owned 2 rentals myself, unless you have profit potiential in the rental as well as the value, the market decision trumps the tax decison. On the tax side, you will be required to depreciate the property in the US resulting in a paper loss- something which the CRA does not allow as capital cost allowances are only allowed only to the extent of profit. That means you will track two basis values till you sell the property . Your ongoing loss claim in the US may not help. Nelson can fine tune Im sure
Joe