How to transfer money to US after selling home in Canada

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

Moderator: Mark T Serbinski CA CPA

Post Reply
enthusiast
Posts: 4
Joined: Tue Sep 20, 2011 11:31 am

How to transfer money to US after selling home in Canada

Post by enthusiast »

Hi, I am a Canadian in US on TN for the last several years. Just recently, I got my GC and am planning to buy my first home in USA. I have a property in Canada (currently rented out) which I am planning to sell and use the funds to buy the house here in the USA. Is there a simple way to bring the money to USA? How would I be able to declare that money without raising any flag?

thanks!
nelsona
Posts: 18680
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

I answered your question on canuckabroad.

I'll be happy to discuss the tax issues here.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
nelsona
Posts: 18680
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Once you left canada, you have one year to sell house before Cdn tax is due on sale. You had 3 years before US tax would be due on sale.

The formula for the gain in canada is (H+1)/T, where H is the years it was your home, and T is the total years you owend the home. You can also choose to make the gain the total since you left canada, if that is less.

The formula for US, is the gains since you made it a rental, or the gains since you left canada which ever is less.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
enthusiast
Posts: 4
Joined: Tue Sep 20, 2011 11:31 am

Post by enthusiast »

Could plz clarify that a bit. For instance, a person stayed in Canada for 2 years in his property that is 5 years old and made a profit of 100k, how would the capital gain be calculated on that?
nelsona
Posts: 18680
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

My formula was a littler off it should state gain would be [T - (Y+1)]/T
Canada: gin would be 100K *[5-(2+1)]/5 = 40K.
For US it is the gain since you switched the property to rental, plus depreciation recapture.

You need to know how much the property was worth when you left.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
enthusiast
Posts: 4
Joined: Tue Sep 20, 2011 11:31 am

Post by enthusiast »

Thanks! Is there a link to get more info about the US taxation in a similar case. In my case, the property increased in price around 30-40 K after renting the place. Does it mean, I have to pay capital tax on 30-40 K in the US in additional to that of Canada?
nelsona
Posts: 18680
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

It's not in addition. You would be able to use the Cdn tax as a credit ,using form 1116.


You will need firm number for FMV on date you moved to US.

have you been properly reporting rent and depreciation on your 1040? If you have you should be familiar with your cost basis.

IRS publication 523 and 527. The treaty has a provision that limits cost basis to no less than FMV at time of move to US.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
enthusiast
Posts: 4
Joined: Tue Sep 20, 2011 11:31 am

Post by enthusiast »

Thanks Nelsona for the insight.
Post Reply