Sale of personal use condo in Florida

Spring 2019 CSANews Issue 110  |   Posted date : May 29, 2019.Back to list

Bird talk - Le Jaseur
What, if any, are the reporting requirements in both Canada and the U.S. when we sell our personal use condo in Florida. Our primary residence is in Canada. We purchased the condo in 2012 for about US$87,000. While the condo has appreciated, the sale price would be less than US$200,000. The section in the CSA Travel Information Guide on "Selling (Disposing) of Property in the United States" doesn't address how or when to report a sale of this nature. Would our real estate agent or lawyer take care of any U.S. and CAD reporting and any relevant withholding taxes? The Canada Revenue Agency information is unclear on sale of personal use foreign property. CRA information seems limited to purchases, i.e. our property doesn't need to be reported since it was purchased for under $100,000 and for personal use only.

Garth McNaughton
Napanee, ON

Response :
Ed.: You will need to file a U.S. income tax return disclosing the sale of your personal use property in the year following the sale. Further, the capital gain will be subject to tax in the U.S. For U.S. tax purposes, a capital gain triggered on property held for longer than 12 months prior to its disposition is subject to preferential long-term U.S. capital gains tax rates (the maximum tax rate is 20%).

You report the sale by filing IRS Form 1040NR, Schedule D and IRS Form W-7 (which will allow you to obtain a taxpayer identification number required to file the return). All of these forms can be filed at the same time.

You will also need to disclose the sale on your Canadian return, but you may be able to use foreign tax credits to reduce or eliminate dual taxation. In our experience, the real estate agent and lawyer do not file on your behalf unless special arrangements have been made. You will need to make your own arrangements with an accountant familiar with the U.S. tax code.

The $100,000 threshold which you reference has to do with an annual foreign property disclosure to Canada Revenue Agency (CRA). Personal use property is not subject to annual disclosure. However, you still need to disclose the sale of the property on your Canadian income tax return.

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