Answers Archive

Capital Gains

Hi Lavie, if the property sells for $400,000, then the gain will be $25,000. Since you are flipping this property, the entire $25,000 gain will be taxable to you and included in your income in the year of sale. Note: interest charges, property taxes, and utilities cannot be added to the cost of the property.

Best way to buy home from Relative for incorporated truck driver

Hi, your father-in law shouldn’t sell you the apartment for $100,000 less than market value, if this an investment property (e.g. rental property). This is because you are understating the true cost amount of the property, and so you will have a huge capital gain when you eventually sell the property.

electing to keep rental property as principal residence (subsection 45(2) of the Income Tax Act)

Hi Ahmed, if you are a factual resident of Canada, then you are eligible to elect under subsection 45(2) of the income tax act. If you are a factual resident and a co-owner of a Canadian property, while the other co-owner is a non-resident, you can elect to treaty your share of the property as … Continue reading

Principal residence

Hi Smith, once you have separated and transferred your matrimonial home to your ex-wife, you can immediately purchase a principal residence. There is no waiting period.

Deemed disposition of Inherited Foreign Property

Hi Sam, for Canadian tax purposes, the cost basis for your mother-in-law of the property in Hungary is equal to the market value of the property on the date of inheritance (i.e. 1983). When your mother in-law passed away, all of her assets would be deemed to be disposed (i.e. sold for tax purposes) at … Continue reading

is there even advantage to starting a resp with cdn/us dual citizenship as residents of canada since the irs taxes on gains as per form 3520?

Hi, there is no advantage. Income from a RESP and TFSA is taxable in the US if you are a US citizen.

Eligible expenses to reduce capital gain on US vacation property

Hi Karen, selling costs can be deducted to reduce the capital gain realized upon the sale. Selling costs include: – commissions paid to a realtor – legal fees paid to a lawyer – repair expenses incurred to make the property ready for sale – land transfer fees (sometimes called stamp taxes)

Income tax for non residents

Hi, you will not have to file a Canadian tax return for the 2018 tax year, since you were in Canada for only 15 days. Non-residents (including Canadian PR card holders and Canadian citizens) can visit Canada for up to 182 days in any 12 month period without being treated as a resident of Canada … Continue reading

Working in UK

If she doesn’t know if she will stay permanently in the UK, then she should continue to file Canadian tax returns as a resident of Canada. As a resident of Canada, she will be taxable on her worldwide income and pay Canadian income tax. To avoid double taxation, she can claim a foreign tax credit … Continue reading

Box 39 – security Option Deduction – paragraph 110(1)(d) of the Income Tax Act

Hi Paul, RSUs are not the same as employee stock options. When RSUs vest, the vested amount is included in your income (T4) and subject to payroll tax. They are not eligible for the 110(1)(d) deduction.

Tax planning for inheriting a realestate corporation

Hi Dave, I’m assuming that the real estate is located in Canada and that the corporation that owns it is a Canadian Controlled Private Corporation. To reduce estate taxes payable upon the death of the current shareholders, consider implementing an estate freeze now. By doing so, the value of the existing shareholders’ shares will be … Continue reading

How to complete IRS Form 6252

Hi Leslie, the purpose of this form is to allow you to defer the payment of capital gains tax until the proceeds are received from the seller. For instructions on how to complete this form, see https://www.irs.gov/pub/irs-pdf/f6252.pdf

CPA Online Courses Tax Receipts

Hi Ying, report the fee on Schedule 11 of your T1 return.

Foreign Income for a Canadian Corporation

Hi Tim, since the work is performed in Canada, the income is eligible for the small business deduction.

Gift Deed Transfer from Parents account in india to Canada

Hi Rama, The gift transferred to you by your parents is not taxable to you in Canada. The gift can be sent by a wire transfer from your parents’ bank account in India to your bank account in Canada. Your parents should prepare a gift letter stating the amount of the gift, the date of … Continue reading

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