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US Federal Income Tax – Gains on Sale of your Home Part 1

Generally, Canadians living in Canada are not subject to tax on gains from the sale of their principal residence. However, for a Canadian resident who is also a US citizen or resident (including permanent resident or “green-card” holder and those meeting the “substantial presence” test), the same capital gain may be taxable on his or her US income tax return. Under US Federal tax law, an individual may exclude from income up to US$250,000 of gain from the disposition of his primary residence. For a married couple filing a joint US income tax return, the maximum exclusion is US$500,000. Any capital gain exceeding the excluded amount is taxed in the US in the year realized.

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US Tax vs. Canadian Tax

December 3 2012

There are many similarities between the US and Canada, but there are some significant distinctions between US and Canadian tax law especially for US citizens resident in Canada, including permanent residents of the US (“green-card” holders). For the unwary those distinctions may result in substantial US tax liabilities where those differences are not identified in advance. The discussion below highlights three differences, among many, that may trigger unexpected US tax liabilities for US persons resident in Canada.

Canadian Tax Law, Capital Dividends, Capital Gains, Green Card, Permanent Resident, Stock Options, Tax Liabilities, US Citizens Resident In Canada, US Tax Law