Selling property in the U.S. if you are not a U.S. citizen
Posted date : May 11, 2022.
I am not sure if Canadians are fully aware that if you are not a U.S. citizen and decide to sell real estate property in the U.S., 15% of the selling price will be deducted from your proceeds and sent to the IRS within 20 days after closing. It is called a withholding tax, which is really a deposit against the capital gains tax due. The capital gains tax is based on the profit made on the sale, and is reported on a year-end U.S. tax return. The reported capital gains tax due is deducted from the withholding tax (deposit) and the balance is refunded. This could take several months. This initial 15% withholding tax (deposit) can turn out to be a considerable amount.
Anne Smith
Bolton, ON
Ed.: All of that is correct. There is one exception available if the sale price is less than $300,000. If the purchaser or members of his/her family intend to occupy the premises for at least 50% of the occupied time over the next two years after the closing, withholding can be avoided. This does not affect any capital gains tax that may be owing, or the requirement to file a tax return relating to the sale.
