It sounds such as you offered or are planning to promote a property within the U.S., Bob. To chop to the chase, promoting prices, like a realtor fee, could be deductible in your Canadian tax return.
This assumes the property is taxable, which is often the case for a international property. Apparently, a property exterior Canada can qualify as your principal residence. However this might be uncommon for a Canadian resident, whose Canadian residence would sometimes be extra worthwhile than a international one, and due to this fact, extra interesting to say as your principal residence.
Do you need to report the sale in Canada?
Assuming the property in query is a trip or rental property, the sale could be reported in your Canadian tax return. Along with your promoting prices, Bob, your acquisition prices, together with authorized charges, renovations or enhancements, can scale back your capital acquire.
Your capital acquire could be calculated based mostly in your web sale proceeds minus the acquisition value, together with renovations. It’s important to convert these quantities from U.S. {dollars} to Canadian {dollars} based mostly on the relevant alternate charges.
The Canada Income Company (CRA) says you need to report international revenue or bills based mostly on the Financial institution of Canada alternate price on the date of the transaction. It should settle for a special price for the transaction date if the supply is:
- Broadly obtainable
- Verifiable
- Printed by an impartial supplier on an ongoing foundation
- Acknowledged by the market
- Utilized in accordance with well-accepted enterprise ideas
- Used to organize monetary statements (if any)
- Used commonly from yr to yr
Bloomberg L.P., Thomson Reuters Company, and OANDA Company meet these standards and are “usually acceptable” to make use of, in accordance with the CRA.
U.S. tax implications of promoting property within the U.S.
The U.S. property sale can even have U.S. tax implications, even should you’re not a U.S. citizen. When a Canadian sells actual property within the U.S., they have to file a U.S. tax return with U.S. capital good points tax doubtlessly payable. It is a frequent requirement in different nations as properly.
The U.S. tax paid can qualify as a international tax credit score to cut back your Canadian tax payable, Bob, to keep away from double taxation.
