Tax on divorce?

groobi · Post by **groobi** » Tue Jul 26, 2016 2:04 pm

Dear all, I own a house in Canada and I'm a non resident in Canada. Does anyone know what happens if I divorce and have to give the house to my wife? I heard about the rollover..Can I use it?

nelsona · Post by **nelsona** » Tue Jul 26, 2016 2:18 pm

there is no longer ant rollover rules in US. they were replaced by limited exclusion of gains for current or former principal residences.

Your portion will be considered sold to her, with possible taxes in Canada and/or US depending on how long it has been since you were resident in Canada.

groobi · Post by **groobi** » Tue Jul 26, 2016 3:27 pm

Thank you nelsona. Do you know if I can use rollover in Canada?

nelsona · Post by **nelsona** » Tue Jul 26, 2016 3:30 pm

No, but you may not have to, if she is living there.
But if neither of you are resident, then you will in effect be selling your portion to her.

SM · Post by SM » Tue Aug 30, 2016 9:45 am

As the seller, you would also be required to abide by CRA's section 116 requirements as a non-resident. Meaning form T2062 and perhaps T2062A (if the property was rented and depreciated) would need to be completed. If applicable, 25% of the gain and likely 22.2% of the recaptured CCA (depreciation) would need to be submitted as a withholding tax upfront to CRA, along with all of the other required supporting documentation.

As Nelsona mentioned, you would then be required to complete a Canadian non-resident return and US resident return at tax time to report the sale and reconcile the transaction. If there was recapture you would also be required to file a special S.216 return on the Canadian side.