1040 requirements re sale of Candian property or proceeds?

Potassium · Post by **Potassium** » Tue Apr 08, 2014 4:12 pm

In 2013 I sold a Canadian property and deposited the proceeds of the sale into a Canadian bank account.

Their was no income generated on the property before the sale (it was not rented out) and there was no capital gains arising from the sale.

So there is nothing to report from an income pov.
However as the IRS rules seem very complex I am trying to confirm if its a requirement to record the sale while filing my 1040 or anything relating to the deposit of the funds from the sale into the Canadian bank account.

nelsona · Post by **nelsona** » Tue Apr 08, 2014 4:23 pm

For general future knowledge, where money is earned, kept, deposited, etc has no bearing on whether it should be reported on yoru 1040. It all has to be reported.

If the property has a capital loss, it is in your interest to report it as such, so that yopu can get the deduction or credit for it against future income or future cap gains.

The sale needs to be reported on 1040, simply to prove that the transaction incuured no taxable income.

Now, what kind of property was this your former residence? a bad real estswe investment, what?

ChromiumDioxide · Post by **ChromiumDioxide** » Tue Apr 08, 2014 4:58 pm

Thank you for the reply.

It was my former (and only) residence until I moved from Canada to the US a few years ago.
After the move the property remained empty until it was sold.

As there was no capital gains, and as CRA are already aware of the sale (it was reported to them at the time of the sale and clearance certificates etc. dealt with) I was assuming there's no parallel requirement to file a return to CRA in order to 'simply prove the transaction incurred no taxable income'.

The reason I was asking about the deposit into the Canadian bank account was because I haven't yet had time to research into forms such as 3520 except a quick look and was therfore wondering if it might count as a "transaction with foreign trusts" which is a phrase used to summarize one of the needs to file 3520.

ChromiumDioxide · Post by **ChromiumDioxide** » Tue Apr 08, 2014 5:02 pm

P.S. I'm Potassium's wife, not hijacking the thread.

nelsona · Post by **nelsona** » Tue Apr 08, 2014 5:18 pm

Bank accountgs aren't foreign trusts.

As you explain, there is no cap loss allowed on this property as it was personal use.

It still should be reported to IRS if it is not considered the sale of your home if you did not live in it the last 5 years prior to the sale.

The IRS desn't accept CRA. Besides, if the Cdn dollar grew in value from time of move to time of sale, there WAS a gain!

nelsona · Post by **nelsona** » Tue Apr 08, 2014 5:27 pm

To reiterate. Filing something with CRA in no way satisfies any IRS requirement.

You still must report the proceeds of any sale, barringan IRS exemption to do this (which would only be the sale of a property in which you lived 2 of the previous 5 years). And the gain/loss would be based on the proceeeds in 2013 US dollars vs. FMV in USD at the time you moved (or when you purchased).

Potassium · Post by **Potassium** » Tue Apr 08, 2014 5:32 pm

Thanks

"It still should be reported to IRS if it is not considered the sale of your home if you did not live in it the last 5 years prior to the sale."

Are you saying if it is considered the sale of our home then it does not need to be reported? We lived in it until 2011 so that falls within the last 5 years.

I guess it does no harm to report the sale even if no overall CG and not necessary, other than additional paperwork?

"if the Cdn dollar grew in value from time of move to time of sale, there WAS a gain!"
Didn't think of that! Can realtor's fees be used to offset gains?

nelsona · Post by **nelsona** » Tue Apr 08, 2014 5:35 pm

If you sold it within 3 years of moving to US, and did not rent it out, there is no need to report a gain, and there is no possibility of reporting a loss.

Proceeds of a sale are always net. While you could have a gain, you cannot claim a loss.

btw, its generally a good idea when posing a question here to give a more detailed explanation in your opening post, rather than adding tidbits of important info each time.