how to recognize Cap Gains from US Brokerage, while living in Canada

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magrathea
Posts: 2
Joined: Thu Apr 22, 2021 10:07 am

how to recognize Cap Gains from US Brokerage, while living in Canada

Post by magrathea »

Dual US/Can citizen, living in Canada, trying to avoid dual-taxation.Moved back to Canada full time a couple years ago.Still have a legacy brokerage account in the US, and a property rental in California, and another in Washington state. 

Question on how to recognize taxes...filling out both Canadian and US taxes.
1. How to recognize the capital gains for what was sold from the brokerage account?  Got a 1099 B.  The same assets have a different cost basis between Canada and the US...since when coming to Canada you set the cost basis for CRA at the present value upon entry (but US still recognizes original cost basis).

a) Do I pay all the cap gains first in the US tax return? Also enter it on the Canadian returns and claim some kind of credit or deduction on the Canadian returns?

b) Do I claim it on the Canadian returns first, then somehow declare it as foreign income, along with foreign tax paid on the US return (and if so what category of income/credit)?

2. Same question for Dividends from the US Brokerage.

3.  For the rental income.  Again, do I claim it first in Canada, then recognize as foreign income on the US taxes, or claim it first on US taxes?

(Using US & Canadian version of Turbotax (if there is something better open to opinions))

Thanks in advance.
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Re: how to recognize Cap Gains from US Brokerage, while living in Canada

Post by nelsona »

Cap gains are, by treaty, Cdn-sourced. So whatever tax you pay in canada on the gains, can be used against the US tax owed on that gains.. You calculate the gains independently on both returns, and then apply the Cdn tax as a credit on with form 1116 (passive) along with any other passive income (like interest).
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
nelsona
Posts: 17014
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: how to recognize Cap Gains from US Brokerage, while living in Canada

Post by nelsona »

The US rental is US-sourced. You calcualte the tax in US and Canada, but now you apply the US tax against the CDn tax on your Cdn return.

US dividends are US-soured. Do the same as the US rental.

As I said, you do your two tax return without any regard for foreign tax credits. You determine the taxes for each item, and then apply the credit in the country that considers the income foreign.
I am taking my usual break from this site until May. Always too many tax-form specific questions at this time of year...
nelsona non grata. Non pro. Search previous posts. Happy Browsing :D
magrathea
Posts: 2
Joined: Thu Apr 22, 2021 10:07 am

Re: how to recognize Cap Gains from US Brokerage, while living in Canada

Post by magrathea »

amazing response time - thank you for the clear answers!
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