Selling Your U.S. Property
If you are a Canadian who owns U.S. property and have made the decision to sell the property, you will be subject to U.S. income taxes when you sell your property.
WHAT TAXES WILL I INCUR WHEN I SELL MY U.S. PROPERTY?
When you sell your U.S. property you will be subject to a non-resident withholding tax of 10% of the gross sales price. There are two exceptions:
- If the sale price is less than $300,000 and the purchaser plans to use the home as a residence.
- If a withholding certificate is obtained. This certificate can be issued if the tax liability will be less than 10% of the sale price and will show what amount should be withheld by the purchaser rather than the full 10%.
DO I HAVE TO FILE A U.S. TAX RETURN WHEN I SELL MY U.S. PROPERTY?
Yes, you are required to file a U.S. tax return for the taxation year in which the sale took place. If you are selling property that you have been renting out and deriving income from, you must file your U.S. tax returns reporting the rental income and expenses up to the date of the sale and pay all of the tax due in order to avoid penalties and interest.
IF I LOST MONEY ON THE SALE OF MY U.S. PROPERTY DO I STILL HAVE TO REPORT THE TRANSACTION ON A U.S. TAX RETURN?
Yes, you must report the transaction on a U.S. return, even if you sold the property at a loss.
Tax laws change frequently in the U.S. and the changes could potentially impact the sale of your U.S. property. Don't be caught off guard; contact C2 Global Law for information and advice on selling your U.S. property.