Selling Property in the US

Summer 2000 CSANews Issue 35  |  Posted date : Mar 05, 2007.Back to list

Dear Birdtalk,

Do you have information regarding taxes (both U.S. & Canadian) when a Canadian sells a condo in Florida? Also, I heard there is a tax relief if you sell a Florida property to a Floridian.

R. A. Jobber


Response:
When a foreign person (Canadian) sells a real estate property (condo) in the United States (Florida), there is a withholding of 10 per cent of the sale price, which is sent to the IRS by the buyer, or on his behalf. This money is to cover any tax which may be payable on the sale. The tax is a maximum of 20 per cent of the profit, which is calculated considering the purchase and sale prices, and deducting the costs of sale and purchase, any capital improvements and certain other expenses. There is no benefit in selling to a Florida resident. There are some exceptions to the withholding, for instance, if the sale price is less than $300,000. and the purchaser, or his family, is going to occupy the premises for 50 per cent of the time during the next two years. There are several other scenarios, such as tax treaty implications and Canadian Capital Gains Tax, pertaining to such a sale, depending on the circumstances, which are far too involved to be discussed in this reply. Also, don't confuse withholding tax with actual tax. Withholding tax is simply a deposit on what you must pay, which could be nothing. It is best to consult a professional before proceeding with a sale, so you know exactly what your options are.