US non resident (Canadian) estate filing requirements upon death owning Arizona Vacation property

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US non resident (Canadian) estate filing requirements upon death owning Arizona Vacation property

Post by jc256 »


I'm having a very challenging time getting a consensus from the accountants I have spoken to with respect to the tax implications in both the USA and Canada. I've already talked to multiple accountants in Arizona and Canada and have got completely different answers.

-Father and mother (both Canadians living in Canada) own a vacation property in Arizona worth now ~$300k with the title "community property with right of survivorship" since 2012
-Father passed in Oct 2020
-Few thousand in cash in US bank accounts (Joint account)
-Vehicle worth about $20k in Arizona (both on title)
-$50K of unrealized capital gains in US stocks held in Canadian brokerage (joint account)

USA Tax perspective:
Trying to determine if there is a need to even file an non resident estate return for my father in the USA post his death. US accountant said no need, just remove my father from the title since the title is community property with rights of survivorship as the property will then be in my mothers name. Canadian accountants talking to their us counterparts say return must be filed since he was on title for the vacation home, even if tax will not be owed due to it transferring to my mother.

What is a reasonable cost to file a simple non resident estate return if it does have to be filed? One US accountant who said we do have to file it came back with some insane quote of $4-7k to do it.

Also trying to clarify if the step up in basis due to it being community property with right of survivorship in Arizona is actually fair market value for 100% of the property and not just a step up of my fathers half. Lots of disagreement from the accountants here but from the reading I have done the entire property should get a full step up to market value (at least from a US tax perspective).

Canada Tax Perspective:
Does Canada take into account the US step-up in basis of the property?
If they do we should just let the property pass to my mother and not realize a gain on it during my fathers final Canadian tax filing. When my mother finally sells, she would likely have minimal capital gain.
If Canada does not recognize the step-up in basis, then it probably makes sense for us to realize a portion of the property capital gain now on my father's 2020 (last cdn) tax filing so my mother doesn't get hit with such a big capital gain when she sells.

Thank you,
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