Paying taxes when selling home in the U.S.
Posted date : Nov 4, 2017.
Dear Bird Talk,
We are Canadian with a vacation home in Arizona. Our AZ builder offers a trade-in program, so we are using this and building a larger home. Our current home gets listed by a realtor which they use for their trade-in business and they pay 1/2 his commission. We pay the balance and the funds from our present home go to the Title Agency in trust, for us, for the new home. Are there any taxes for us to pay and do we have to complete a U.S. tax return when the money is going straight into another home?
Ed.: The sale of your current home would be subject to capital gains tax on the difference between the sale price and the purchase price you paid, less any improvements. Ten per cent of the sale price is required to be sent to the IRS and you (and your spouse) each have to file a U.S. tax return, Form 1040NR, for the year in which the sale takes place. The new home is of no consequence.