How do I report the Sale of USA Personal Use Property

[Mswalleye2]

Husband moved to Canada, we eventually sold his home. On the Canadian tax return he has a loss but on his American return he has a gain. How does one report the taxes paid in the USA? The amount of money we spent finishing this home off since he moved to Canada .. exceeded any possible gain in Canada.

[nelsona]

Since it was personal use property, you cannot claim a loss in Canada, and since there was no gain, he cannot claim any IUS tax as credit.

He had three years to sell it after he left US to avoid US cap gains. Did he do it in time?

[Mswalleye2]

No, it has been 12 years since he came up.
So, the capital gains will zero out in Canada and I will only claim a FTC for his US pension income and interest?
Tks.

[nelsona]

Not interest. Interest has to be re-sourced to Canada and claimed as FTC in US. CRA doesn't give credit for interest for US citizens.
So, only pension.

[nelsona]

And don't forget to add all the work he did to the cost basis for the US house, that should lower his tax bill

[Mswalleye2]

Tks. You mention that Canada gives no FTC interest credit for US Citizens ... what if he is a Canadian citizen too?

[Mswalleye2]

nelsona wrote:
> Not interest. Interest has to be re-sourced to Canada and claimed as FTC in
> US. CRA doesn't give credit for interest for US citizens.
> So, only pension.

I finally sorted out Form 1116 for the US bank interest ... then found out about Form 8833. I am reading that it is required and also reading that for resourcing to take a tax credit .. you don't file. I also just read that US citizens cannot take advantage of the treaty due to a savings clause? Also seen this court case ....

On May 16, 2010, the U.S. Tax Court in the decision of – Elazar M. Cole v. Commissioner of Internal Revenue, T.C. Summary Opinion 2016-22 (May 2016) – confirmed the principle that a U.S. citizen cannot (as a general principle) use the Tax Treaty to prevent U.S. taxation.



Can I get confirmation on whether my US husband can re-source or not? If so, would Form 8833 be required? I am not doubting what I was told on here but am wondering what the work around was?

[nelsona]

The savings clause does not apply to the whole treaty.

8833 is almost never required for individuals, become of income threshold. It is used really as a alert to tell IRS what you are doing, but the fact that you are using the resourced BY TREATY 1116 category is sufficient. The fact that this category exists should also tell you that using the treaty is allowed by US citizens.

You are probably reading WAY TOO MUCH at this point. Keep it simple.

[Mswalleye2]

Really appreciate your help ... you are bang on about the reading too much into things ...thanks