U.S. resident and sold Canadian rental

[Marina]

Moved to the US in the late nineties, Rental was acquired after move to the U.S. Do I have to pay capital gains taxes in Canada? From the treaty it sounds like the tax will be paid in the US (Article X111 Gains). Is that correct?

[JGCA]

Capital gains by a US resident on Canadian Real Estate will result in the gain being taxed in Canada and the US. In Canada you will have had tax already witheld on the sale at 25% of the Gross or you have asked for a tax clearance certificate and have had the 25% deducted on the entire capital gain ( 100% not the 50% taxable amount)

You then have to file a Canadian tax return to calculate as a non resident what the actual tax owed is with this you can then claim this as a foreign tax credit on the 1040 you file showing the gain in the US, so you will get credit for tax paid to Canada.

If you have not been reporting the rental income to Canada they will realize this once you ask for the clearance certificate and may ask you to file back year returns since they now know of your circumstances.

Of course if you already were reporting it to the US and Canada as you were suppose to it should be easy to get the certificate from CRA. If property is loacted in Quebec you also meed to get the same clearance certificates from ARQ too and pay witholding tax to Quebec also.

[nelsona]

The poster has misread the treaty. Cdn real estate remains traxable in canada regardless of where on lives, and for US residents, in US as well.

[JGCA]

Definitely the poster has misready the article, as Nelsona said. That is why I explained the tax implications concerning the Real Estate cap gain since that article would not apply.

[nelsona]

Your explanation was not wrong.

I was merely adding -- since the poster specifically refered to the treaty, and you did not -- that the treaty does not affect either countries right to tax this income.