Hello,
Four years ago I bought my house in Canada. At that time I was a resident of Canada and the house was my principal residence. Then I moved to USA and rented out my house. Now, being a resident of USA and a non-resident of Canada, I have sold my house. I have a capital gain because of increasing in house price and currency appreciation. Can I offset the gain realized from the sale of my property with a loss realized from the repayment of a mortgage loan used to finance the purchase of the property? Does the fact that my property was rented out for last 2,5 years, and sold as a rental property make any difference?
Thanks
Loss realized from the repayment of a mortgage loan
Moderator: Mark T Serbinski CA CPA
First to the gain:
In canada the most you can be taxed on is 1.5/4 of the total gain, in Cdn dollars. You get credit for living there an extra year when calculating your cap gains.
In US, your cost basis is the value of your home the day you left (in USD of that day) or your original cost (in USD at time of purchase), whichever is HIGHER. You have been depreciating so you need to add this.
As to the "loss" on the mortgage. If you mean by 'loss' some form of early payment penalty, perhaps. But if you mean that you sold the property for less than the mortgage pay-off and add to pay more, then NO. This is not an expense.
In canada the most you can be taxed on is 1.5/4 of the total gain, in Cdn dollars. You get credit for living there an extra year when calculating your cap gains.
In US, your cost basis is the value of your home the day you left (in USD of that day) or your original cost (in USD at time of purchase), whichever is HIGHER. You have been depreciating so you need to add this.
As to the "loss" on the mortgage. If you mean by 'loss' some form of early payment penalty, perhaps. But if you mean that you sold the property for less than the mortgage pay-off and add to pay more, then NO. This is not an expense.
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
Thank you, nelsona
By loss on the mortgage I mean that when I took mortgage loan Canadian dollar was much cheaper then when I repaid mortgage on the date of sale.
So, in US$ I repaid 207k mortgage loan with 270k what make a loss of $63k.
Could this loss of US$63k be deductible against Capital Gain or Ordinary income?
By loss on the mortgage I mean that when I took mortgage loan Canadian dollar was much cheaper then when I repaid mortgage on the date of sale.
So, in US$ I repaid 207k mortgage loan with 270k what make a loss of $63k.
Could this loss of US$63k be deductible against Capital Gain or Ordinary income?
Neither.
Any loss is determined on the cost and proceeds of the investment, not any loan that was taken to make the money.
Your capital loss comes from the value of the HOUSE compared when you moved to when you sold. THIS should get you some loss, which you can write off against other gains, or take $3000 of it per year against your income.
Any loss is determined on the cost and proceeds of the investment, not any loan that was taken to make the money.
Your capital loss comes from the value of the HOUSE compared when you moved to when you sold. THIS should get you some loss, which you can write off against other gains, or take $3000 of it per year against your income.
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