[http://www.youtube.com/watch?v=NzlG28B-R8Y]
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Home ownership good tax free investment in Canada natpo.st/OEiX37 – but not tax free cap gain for US citizens – renounceuscitizenship.wordpress.com/2012/08/17/u-s…
— U.S. Citizen Abroad (@USCitizenAbroad) September 19, 2012
Interesting article in today’s National Post.
Question: This article makes the point that home ownership is treated as a retirement planning vehicle for many Canadians. A principal residence is NOT a tax free capital gain for US citizens. As you know citizenship-based taxation disables US citizens abroad from retirement planning. Many US citizens are dual Canada/US citizens. 3% of the population of Canada are US citizens. How can the US prevent 3% of the population of Canada from retirement planning? This is a direct assault on the sovereignty of Canada. The government of Canada needs to wake up to this.
Does this effect of US citizenship-based taxation violate human rights laws?
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Leaving aside the effect of this on US citizens abroad, this is also very bad for the “Homelanders”. This policy discourages home ownership. Obviously this will have a negative effect on wealth and financial planning in the US. If I were an investor in the US, I would invest in rental property. The US is becoming a nation of renters, and debtors with few assets.
I can’t believe that there is no serious discussion about tax reform going on during this election. There is a clear link between home ownership and wealth. A discussion of “tax rates” is NOT a discussion about tax reform. “Form Nation” has simply gone out of its mind. Every time I think about what the US is doing, I feel as though I have entered the “Twilight Zone“. There is no rationality to it at all.
Be happy you don’t live in the Twilight Zone.
Due to citizenship based taxation, USP’s no longer live in the Twilight Zone because we’ve moved to the Outer Limits.
As someone who is in the process of buying a house here in Versailles, that is really discouraging. part of the reason we are doing this is to diversify our investments and plan for retirement. There will be now fewer than 3 US citizens domiciled there for at least the next few years. Will have to add this to my cost/benefit analysis. Nuts!
(If anyone is interested pictures of the house can be seen here:
http://thefranco-americanflophouse.blogspot.fr/2012/08/buying-house-in-france.html
http://thefranco-americanflophouse.blogspot.fr/2012/08/more-about-house.html)
*I’ll be reviewing this in more detail when I have time, to see how my Swiss and US retirement home purchases will be treated by US “representation”.
@swisspinoy, Please, please do! It would make an excellent post.
#7. Warning: USD exchange rates at the front and back end factor into the capital gain on the sale of a principal residence, something a home owner has little control over at the time.
http://www.moodystax.com/iphone/21-us-taxation-services/151-us-citizens-resident-in-canada-common-circumstances-where-us-tax-may-be-payable.html
Victoria – Commiserations. Your house circumstance reminds me to share this aperçu gleaned some time ago from a presentation by a cross-border specialist. Assuming of course that this otherwise works – imponderables including projected future certainty of marital relationship. An extraterritorial US person with a not US person spouse can use the annual gift exclusion of $138K to transfer ownership of something like a house to the not US person and over time to extract the property from US taint. If you have not yet bought, perhaps you can structure things for greater simplicity. For example, not having to “assess” repeatedly a piece of real property whose value may not be a set figure. This insight may benefit others, if not you.
@usxcanada, Thanks for the very useful info. That would certainly help. Just for the hell of it I started doing some back of the enveloppe calculations based on the house value, our marital status and French inheritance law. My husband and I are married under the French “regime communauté de bien réduite aux acquets” which is kinda sorta like “community property.” So under French inheritance law, if the house was worth, say, 400,000 Euros, the distribution if I were to pass away would look like this:
200,000 (my half of the house) of which my spouse would get 50,000 and the Frenchlings would get 133,2000. What is left over can be given either to my spouse or the kids. The kids are US citizens so I think they would get enough deductions not to have to pay US tax. My French spouse (I think) would be under the 60,000 deduction and would be OK. Anything over that and I think we are looking at double taxes.
To complicate matters my husband and I have something that I think is called a “donation” that we had done years ago that allows the surviving spouse to keep the property (the ownership is split however between the surviving spouse and the kids) and the usufruit until he/she dies and then it passes along to the kids. I haven’t a clue how all this plays out from the perspective of the US gov. I’d be interested (if anyone wishes to share) what the rules are in their country of residence and what advice or experiences folks may have with this kind of situation.
And if they make it even more likely to entrap Canadian snowbirds, and continue to discourage travellers and tourists from here who just wanted to spend some of their retirement time and money in the US, it is helping Canadians to just say NO, we’ll spend our robust dollars somewhere else, thanks.
http://travelinsurancefile.com/headlines/snowbirds-keep-track-of-your-border-crossings/
…”Tensions throughout the world are forcing tighter border crossing regulations and procedures. Crossing over into the U.S., and back is no exception. Be prepared for more rigid enforcement this fall and winter. Have your documents on hand, and keep track of your entries and exits. “….
,,,”Carrying a recent copy of an 8840 closer connection IRS form to show you are a Canadian complying with U.S. tax laws is also a good piece of paper to have.”…..