Foreign Property sale

My client sold two US properties. I never done taxes for foreign properties. Are we reporting it the same way, we report Canadian property on S3? Or there is something different? Thanks for your suggestions.

If they the exceded $100,000CAD cost, have you been filing T1135s?

Reported on the US return along with the taxes payable. Then reported on the Canadian return Schedule 3 with a credit for the US taxes paid.

1 Like

Are you talking about the capital gain exceeding over $100000 or the total sale amount?

No, I am asking if the orignal cost of the US properties exceeded $100,000CAD. If so, T1135s should have been filed in years gone by.

Thanks for the clarification.

I sold a US property personally last year. I don’t do US returns so I had another accountant prepare the US return and I paid the taxes to the IRS (deadline April 15th by the way). Those taxes I claimed as a foreign tax credit on my Canadian return. Make sure to keep a copy of the cheque and write the date mailed to the IRS. Also make sure to access and save the cancelled cheque through the bank. The foreign tax credit was reviewed by CRA and they accepted the cancelled cheque and my US return.

On the Canadian return, I reported the capital gain in Canadian$ on Schedule 3. Use the 3M Capital Gains Manager in TC as that will help you apply different exchange rates to the ACB and the Proceeds and allow you to list separately the selling costs and foreign tax paid.

The $100,000 that Helga is referring to is for the T1135 Informational return. That would only have needed to be filed in previous years if it was specified foreign property. If you hadn’t been preparing them previously (maybe it didn’t meet the criteria), I would do one this year because there is income.

1 Like

Very well explained, thanks @Versa