How to Reduce Withholding Taxes on the Sale of U.S. Property Watch Video
Allan Madan, CPA, CA
Are you selling or thinking about selling U.S. real estate? Read More…
Disclaimer
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.
ABOUT THE AUTHOR
ALLAN MADAN
CPA, CA
Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.
hello,
Thanks a lot for making this video. It’s really helpful. Can I ask you question regarding the tax liability you reported for Dustin B?
What if this was not a vacation home and Dustin lived there for all this time. Would the 250K threshold of capital gain kick in?
Please let me know.
Thanks, Rudy
Hi Rudy,
If Dustin owned the home for at least two years AND lived in the home for at least two years during the 5 year period ending on the date of the sale, then Dustin can exclude up to $250,000 in the gain of his home from his income (the amount is $500,000 for married, joint filers).
Hi Allan
Great example given with actual form completion. Loved it!
I have had annual losses on my rental property which I am selling and closes shortly.
I was thinking about using form 8582-CR Part VI to elect using my unused losses to increase my cost of the property. I have about $48,000 in loss carry forwards and about the same in used depreciation. On what form do I claim the $48,000in loss carryforwards?
Also I read somewhere that as a married couple filing jointly you can have up to $80,000 capital gain tax free. I see you did not apply that in your example. Just curious why not?
I have completed the 1040NR and a Withholding Execmption Certificate but would like it reviewed by someone with more experience and knowledge. How much would you charge to review?
Thanks
Hi Dennis,
The losses become fully deductible when the activity is sold — including any loss on the disposition (subject to capital loss limitations). Even if you realize a gain on the sale, you can offset by current year income loss and net operating loss from the prior year. Kindly fill out Form 8582 to calculate your current and prior year losses. Furthermore, there is no exemption available for “Non-Resident Selling US rental property”.
Please reach out to our tax accountant rohan@madanca.com for further assistance.