Selling foreign investment property

10 Replies

Hello BP,

I am looking for advise.

I am in the process of listing my investment property in Canada for sale. I will be making a profit on it and I am looking to keep as much of the profit as possible. Of course the property will be sold in Canadian dollar and as of today the exchange rate is $1 US = $1.16 Canadian. So right off the bat I will be losing 16 cents on the dollar when I bring the money south of the boarder. I will also be paying Canadian taxes on the property when sold and filling Canadian taxes for 2021.

My question is how much will Uncle Sam want of the profit? Is there a way to not lose a bunch of money in taxes?

Thank you for the insight,

Matt

@Matthew Purvis

Whether you owe Uncle Sam for taxes depends on a number of factors. Starting with whether or not you are even subject to US taxes.

Talk to your accountant, it’s fairly straight forward to ascertain whether you are subject to US taxes.

Originally posted by @Matthew Purvis :

@Christopher Smith

I would be transferring money from Canada to the US. The Canadian dollars is only worth 84 cents US.

The US dollar is worth more in Canada. The Canadian dollar is not worth as much in the US.

An immediate exchange of currency for currency results in neither a tax loss, nor an economic loss, its simply an exchange of value for value. The only way you would have a loss is if what you paid in measured in US dollars to originally buy the property is more than what you realize measured in US dollars when you sell it. That amount (whether net gain or loss) will implicitly include the delta in the value of the property itself, and the delta in the exchange rate between the two currencies over that period of time. 

Are you a US citizen or resident?

 

@Matthew Purvis Sounds like you need a cross boarder CPA. I am doing the opposite, Canadian investing in the states. Everything depends on how you were structured initially! For example the CRA does not recognize LLC's, and the IRS might not recognize your Canadian entities. You will definitely be taxed in Canada for the sale, the key here is to pay minimal taxes on the US side when you bring the money back home!