IRS 6013 (g) election and Canadian Spouses's rental income

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grrhuman
Posts: 5
Joined: Wed May 13, 2020 11:04 pm

IRS 6013 (g) election and Canadian Spouses's rental income

Post by grrhuman » Mon May 25, 2020 1:10 pm

Hi Everyone,

I live in the USA and my wife lives in Canada. For my US tax return I'm looking to choose married filling jointly (MFJ) using IRS 6013 (g) election.
My wife doesn't work but rents out rooms in her principal residence, which is only under her name, and reports the income to the CRA in Canada

Questions

a) When we report her rental income to the IRS for my MFJ tax return. Can we depreciate her Canadian property?
b) If she ever sells her house and have to report capital gain in the US. Can she cancels her IRS 6013 (g) election that very year to avoid the capital gain? Will she ever be subjected to any sort of "exit tax" to recover the depreciated amount?
c) I understand if b) is done we will never be allowed to MFJ ever again. We can accept that if the tax avoided is significant
d) Given that we live separately, do we have two principal residences? or would my residence in the US be the principal residence (and hers not)

Thank you for reading and appreciate your help in advance.

nelsona
Posts: 16413
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: IRS 6013 (g) election and Canadian Spouses's rental income

Post by nelsona » Tue May 26, 2020 10:46 am

a) you MUST depreciate her property for IRS. no option.
b) the election is on a year-by-year basis. If it is not advantageous in that year, don't file with her. Will not need to recapture depreciation.
c) I'm not sue the decision is irrevocable. I will check
d) you cn ususlly have 2 principle residences in such case. In any event, since you live in US and are not taxable in canada, it shouldn't matter.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nelsona
Posts: 16413
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: IRS 6013 (g) election and Canadian Spouses's rental income

Post by nelsona » Tue May 26, 2020 8:56 pm

You are correct that once you elect to use 6013(g) and the choose to revoke it, you will not be able to use it again.

Just to be clear though, if she uses it as rental property she cannot claim it as principal residence for that time. So, not sure what exemption you would be claiming in future, either for Cdn or US purposes.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

grrhuman
Posts: 5
Joined: Wed May 13, 2020 11:04 pm

Re: IRS 6013 (g) election and Canadian Spouses's rental income

Post by grrhuman » Wed May 27, 2020 8:54 pm

Thanks Nelsona. Appreciate your help!

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