It sounds such as you bought or are planning to promote a property within the U.S., Bob. To chop to the chase, promoting prices, like a realtor fee, can be deductible in your Canadian tax return.
This assumes the property is taxable, which is often the case for a international property. Curiously, a property exterior Canada can qualify as your principal residence. However this could be uncommon for a Canadian resident, whose Canadian residence would usually be extra helpful than a international one, and subsequently, 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 can be reported in your Canadian tax return. Along with your promoting prices, Bob, your acquisition prices, together with authorized charges, renovations or enhancements, can cut back your capital achieve.
Your capital achieve can be calculated based mostly in your internet sale proceeds minus the acquisition price, together with renovations. You need 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 earnings or bills based mostly on the Financial institution of Canada alternate price on the date of the transaction. It is going to settle for a distinct price for the transaction date if the supply is:
- Extensively accessible
- Verifiable
- Printed by an unbiased 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 often from yr to yr
Bloomberg L.P., Thomson Reuters Company, and OANDA Company meet these standards and are “typically acceptable” to make use of, in keeping 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 in case 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 beneficial properties tax doubtlessly payable. It is a widespread requirement in different international locations as properly.
The U.S. tax paid can qualify as a international tax credit score to scale back your Canadian tax payable, Bob, to keep away from double taxation.
