Income Taxes on the Sale of U.S. Property in Canada
                     Income Taxes on the Sale of U.S. Property in Canada
https://www.maroofhs.com/post/cross-border-tax-issues-f
or-canadian-taxpayers-selling-us-property/
Canadians love the warm weather of Florida and California. This is 
the reason lot of Canadians do own the properties in the U.S. If they 
are not living there, they are holding it for investment purposes. 
There are many income tax issues Canadians should b aware of while 
selling their U.S. properties. 
For a detailed information on the tax issues involved with sale
 of U.S. properties, read here
.
• Under Foreign Investment in Real Property Tax Act aka FIRTPA, the 
buyers are required to withhold 15% of the sale price and remit to 
IRS. There are exception involved, for more details refer to the link 
mentioned above.
• A U.S. ITIN also known as US TIN or individual income tax number 
is needed whenever a US property is sold to ensure withholding taxes 
are credited to right account by the IRS. An ITIN is also needed when 
the seller want a reduced withholding rate.
• Seller must file a U.S. federal tax return. For this purpose form 
1040NR is used to report gain or loss. FIRTPA withholding is netted 
off with the final tax amount to calculate tax payable or a refund.
• Correct preparation and submission of form W7 is critical in the 
whole process. Its important that you read all the instructions to 
avoid wastage of time and back and forth with IRS. If you find the 
instructions overwhelming use the services of a Certifying acceptance 
agent near you. Canadian notaries or lawyers cannot certify your 
documents.
• The gain or loss is also reported to Canada Revenue Agency in 
Canada. The taxes paid in the U.S. become foreign tax credit so only 
the difference is paid. Foreign tax credit does not create a refund in 
Canada. So you pay the higher of taxes in US or Canada on property 
sale.
• If you don’t file your tax returns in the U.S., you cannot get foreign 
tax credit in Canada even if you are having form 8288-A stamped by 
the IRS.
Maroof HS CPA Professional corporation is an IRS Certifying 
acceptance agent located conveniently in Greater Toronto Area in 
Canada. Further, cross border tax expertise help with the correct 
preparation of U.S. income tax returns.
You can reach us at:
3-100 Hanlan Road, Woodbridge, ON L4L 4V8
Phone: (647)724-4308
Email: [email protected]
https://www.maroofhs.com/contact/
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