Gee US sonny - do I 'sell you' or 'gift you' my CDN house?

denisharlock · Post by **denisharlock** » Sat May 23, 2009 6:50 am

I am a dual citizen , non-resident, living in the US.

Mother bought Canadian house in 1960 for $100k. Valuation Day (Dec 31/71) value $200k. Present value $300k.

If I purchase it, my base value (for US capital gains) is $300k

If she transfers (gifts) to me today - my base value will be $100k or $200k ?

Thanx

nelsona · Post by **nelsona** » Sat May 23, 2009 9:23 am

$300K

nelsona · Post by **nelsona** » Sat May 23, 2009 9:31 am

Sorry, you didn't say if the mother was US cizen. My answer is based on her being Cdn.

denisharlock · Post by **denisharlock** » Sat May 23, 2009 10:11 pm

Yes mother is Canadian.

My understanding is that if it is gifted to me (and therefore no land transfer tax paid) then the base value is not the present value?

Comment ?

nelsona · Post by **nelsona** » Sun May 24, 2009 5:21 am

Under which tax regime?

denisharlock · Post by **denisharlock** » Sun May 24, 2009 7:10 pm

I live and work in the US.

So my questions are regarding how the IRS will view this on my return.

Again, I have been advised that if my CDN mother transfers (or gifts to me) the CDN property that I cannot take the present day value ($300k) as the base for calculating capital gains when I sell it.

So what is the base value that I am to use? $200k or $300k or is it $100k?

Sorry for any confusion...........

nelsona · Post by **nelsona** » Mon May 25, 2009 6:26 pm

I guess you have been advised.

nelsona · Post by **nelsona** » Mon May 25, 2009 6:35 pm

If I were you, I'd buy the house and have your granny give you the $300K, then there is no question. Transfer fee would be a miniscule price to pay to zero the gain.

In Canada, the clock will start ticking at $300K, since yopu will owe Cdn tax from the time you recieve the property, regardless how IRS views it.

Remember that the treatment may have something to do with estate/gift tax. If she were a US citizen, I could see the treatment you quoted as being thecaee. You would be, in effect, agrreing to pay cap gains tax instead of granny paying estae ort gift tax.

But since she will never owe either cpa gains or estse tax on this, why should you set yourself up to do so. Arrange it so that she gives you money, not appreciated wealth, and buy the house from her outright.

denisharlock · Post by **denisharlock** » Mon May 25, 2009 6:42 pm

It sounds like very good advice.

thanx