Canadian capital gains
Moderator: Mark T Serbinski CA CPA
Canadian capital gains
Is there any way to avoid double taxation on Canadian capital gains earned by a US citizen resident in Canada?
The same way you get relief on all non-wage income: form 1116.
As a Cdn resident, all your cap gains are considered Cdn-sourced, even if held in US, so there is no relief possible on Cdn return.
For US purposes, the gains are all considered foreign (and those that were US-based are 're-sourced' as foreign) so you can use 1116 passive income.
As a Cdn resident, all your cap gains are considered Cdn-sourced, even if held in US, so there is no relief possible on Cdn return.
For US purposes, the gains are all considered foreign (and those that were US-based are 're-sourced' as foreign) so you can use 1116 passive 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
Canadian capital gains for a US citizen resident in Canada
In Canada, only 50% of capital gains are taxed while 100% are taxed in the US. So, less tax is paid in Canada, less is available for an offset on 1116, leaving tax owing to the US. Is there any way to recover the extra tax or avoid it?
You would use both. Only the gains from US real or resource property would be re-sourced.
To Ron: Once Canada has taxed you on cap gains, your only recourse is the US tax return. However, you are limited by (a) your US effective taxrate and (B) the foreign tax you paid or accrued.
Generally the US effective rate limits your credit; in your case, it may be simply that the Cdb taxrate is lower than the US. Nothing can be done about either situation.
Foreign tax crdits, while paying lipservice to eliminating double taxation, genarally do not. that is why lower non-resident flat taxes in treaties are so beneficial.
To Ron: Once Canada has taxed you on cap gains, your only recourse is the US tax return. However, you are limited by (a) your US effective taxrate and (B) the foreign tax you paid or accrued.
Generally the US effective rate limits your credit; in your case, it may be simply that the Cdb taxrate is lower than the US. Nothing can be done about either situation.
Foreign tax crdits, while paying lipservice to eliminating double taxation, genarally do not. that is why lower non-resident flat taxes in treaties are so beneficial.
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
I was thinking about starting a corporation, of which sole purpose is real estate investment. Can the purchse of a piece of real estate be considerred as invenstory and the sale of the property be regarded as sales? The gains will just be company profit after all the expenses. You pay the taxes based on the taxable income. Will that work for a company as a whole? Thank you.