Real estate tax: One million American citizens in Canada face double tax troubles

For Americans abroad, your home will never be your retirement plan.

Financial Post

Owning real property on both sides of the border can create a confusing tax situation.

Consider this example. Stefan and Jane are married and live in Vancouver. Jane is a Canadian citizen while Stefan holds both U.S. and Canadian citizenship. In 1994, shortly after getting married, they bought a house for $250,000 (all figures in U.S. dollars for simplicity’s sake), which they own jointly.

Thanks to the Vancouver housing market, the house is worth $2.25 million. Their increased net worth prompted Jane to buy a condo, in her own name, in Arizona, next to Stefan’s favourite golf course.

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Now Stefan and Jane might owe some U.S. tax if they want to sell the house or the condo. Under Canadian tax rules, the sale of their principal residence – their house – is free of capital gains tax (the tax due when an asset you own has appreciated in…

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