I just noticed a comment from EmBee, who passed on to Brock a Maple Sandbox comment from “Anthony”, apparently a “Canadian lawyer”.
— Anthony actually says that the U.S. is planning to have homes of U.S.-tainted Canadian citizens FBAR’d (annual resale values etc. reported). Nonsense? Just a scare tactic?
If true, would this be that final straw that finally pushes affected, previously FBAR-obedient and quietly compliant Canadians into mass resistance, self-certification-without-permission-renunciation, and high anger?
Would you be willing to let FINCEN (Financial Crimes Enforcement Network) know the annual resale value of your Canadian-made family home in your yearly FBAR reporting?
“… This problem will only get worse in the near future.
I have been told that plans are underway to include the annual resale value of all non-U.S. property holdings, including your own home, on future FBAR reports.
That means that your primary residence will soon be fair game for the IRS.
Second, plans are underway to also include on the FBAR report any business that a designated U.S. person may own outside the U.S., including all personal details of non-U.S. partners in the venture.
So, if you are a Canadian with U.S. taint, you will soon have to report your Canadian home’s resale value, year of purchase, personal identifying details on those who also own the home, as well as the same sort of details for any business that you may own in Canada…”
@JapanT
I can appreciate the situation you’re in. If I could do it all over again, I might tell them to stuff it. But then, maybe not. Making decisions on shifting sands in an earthquake zone isn’t always the easiest thing to do.
@BB
There are no decisions for me to make. I can not even entertain the idea of begining to concider complying with the form people’s paperwork fetish.
You are not in the minority, JapanT. There may come the day when the only American abroad is a non-tax compliant one.
Except with FATCA I can not see how even that is possible.
Even Trudeau wants to buy a house in Canada. Anyone want to warn him what will happen to him if he does?
http://doonesbury.washingtonpost.com/strip/archive/2016/8/28
Up until now Canada Revenue Agency (CRA) has not required Canadian residents to report the sale of a home that has been their principal residence throughout the time they owned it, because no tax would be owing. However new rules introduced early October 2016 will require every sale of a principle residence to be reported to the CRA, starting with sales in 2016. If the CRA shares this with the IRS the US will have even more opportunities to confiscate part of the proceeds of sales of Canadian homes by Canadian residents who have the misfortune to be labelled as US persons. That the Canadian home was paid for over the years by money earned in Canada matters not a whit.
OMG, it’s true what fn0 just posted re: sale of a principal residence in Canada. Here’s the CRA link:
http://www.cra-arc.gc.ca/gncy/bdgt/2016/qa11-eng.html?from=timeline&isappinstalled=0
What the heck are they up to? This is beginning to look like the CRA and the IRS are merging. Are we knee deep in the North American Union mud and they just haven’t officially informed us about it yet?
“Up until now Canada Revenue Agency (CRA) has not required Canadian residents to report the sale of a home that has been their principal residence throughout the time they owned it, because no tax would be owing.”
http://www.cra-arc.gc.ca/gncy/bdgt/2016/qa11-eng.html?from=timeline&isappinstalled=0
Thanks fn0 and EmBee for this new and disheartening information. We are all being tracked to death. I thank God to no longer be a US person. Where is this all going?
This is not as sinister as you think. Hundreds of sellers, who were not entitled to the principle residence deduction, took it anyway. This includes real estate speculators, builders, and offshore residents. The CRA needs to understand when someone is or is not entitled. There is no provision to share this info with the IRS.
It’s a slippery slope, DoD. How many times has “they wouldn’t do that” turned into “oh no, they actually did that” for us? How many more times to come?
I agree…it’s a slippery slope. Just look at what’s happening with the US election. And the Liberal Party in Canada…can they be trusted to stand up to the US? Somehow I don’t think so. It’s a sad situation that no country worldwide is doing so. Renounce and rejoice, if you can. Otherwise stay below the radar and don’t travel south of the border.
The comment from @PatCanadian above is extremely important.
To recap:
1. The sale of a principal residence in Canada is not (in general) subject to a capital gains tax in Canada.
2. Because the sale has NOT been subject to a capital gains tax in Canada, there has been NO requirement to report the sale of the principal residence on the Canadian tax return.
3. Because there has been no requirement to report the sale, tax preparers have NOT asked for this information in connection with preparation of the Canadian return. They will now ask whether there has been a sale of a principal residence. (Which will also result in some cases of a less than 100% exemption.)
4. Most U.S. citizens in Canada fit into one of the following categories:
– they do not know they are required to file U.S. taxes
– they know they are required to file U.S. taxes but do NOT know that they sale of a principal residence is subject to U.S. capital gains tax
– they know they are required to file U.S. taxes but do NOT file them
5. Most U.S. citizens in Canada who file U.S. taxes use a U.S. tax preparer and simply hand the tax preparer their Canadian tax return.
6. The sale of a principal residence will now be reported on the Canadian tax return and will have been identified for the U.S. tax preparer.
7. This will lead to the automatic reporting on the U.S. tax return of the sale of the Canadian principal residence.
So, this is a BIGGGG! problem for people who don’t know about the U.S. taxation of the Canadian principal residence.
The Government of Canadian (or more particularly he Trudeau Government) is probably the best friend (sometimes by accident and sometimes by design) the IRS ever had.
That said, it’s interesting how:
Osama Bin Laden set the stage for Americans to “willingly, enthusiastically, and mindlessly” accept the erosion of their liberties and privacy; and
Chinese home buyers in Vancouver have led to the changes in reporting of the sale of the principal residence in Canada which has lead to problems for Americans abroad.
It’s tough to be a U.S. citizen in a modern and global world.
Here is one of the better articles on new reporting of the sale of a principal residence:
http://www.advisor.ca/tax/tax-news/principal-residence-exemption-whats-changed-what-hasnt-213198
and of course the message from the Canada Revenue Agency:
http://www.cra-arc.gc.ca/gncy/bdgt/2016/qa11-eng.html?from=timeline&isappinstalled=0
@Dod writes:
Of course there is a provision to share the information with the IRS. That provision is the Canadian tax return.
I’ve heard it suggested that Canadians could just hand their Canadian tax returns over to the IRS. This change would now bring that closer to reality.
Something that has not been mentioned is exactly how a capital gain is actually calculated. In the US, because homeowners know that there is a potential taxable gain on their residence, most will have a filing cabinet full of receipts for every doorknob replacement, every re-roofing, every kitchen reno, etc, etc. All those expenses are added to the original purchase price in order increase the cost basis and reduce the capital gain.
In Canada, no one bothers to keep track of all those house ownership expenses because the gain isn’t taxable. So a Canadian resident unlucky enough to be subject to US capital gains tax on their principal residence, is unable to document the ongoing expense of home ownership. Without such documentation the gain will be the simple difference between the original purchase price and the sale price. Anyone who actually owns a home is well aware it isn’t quite so lucrative as it superficially appears to be.
Another factor is the potential effect of inflation. There is a huge difference between owning a house for 30 days (a flip), and owning a house for 30 years. Selling a house for double the purchase price sounds good on paper but after 30 years of ownership its entirely possible the owner could have actually lost ground financially once inflation is taken into account.
@maz
And here’s another bugaboo. Canadian home owners who built their own principal residence themselves (like my husband and I) may not have saved all the receipts for their building materials. They will have proof of the land purchase price and proof of the sale price but not necessarily proof of all the materials they bought. Materials will almost always far exceed the land price. In the US the base price for the capital gains calculation on an owner-built home includes materials (provided receipts are available) but not the labour put in by the home owner. I don’t know what the Canadian rules are about this but who would have cared about it before?
“I’ve heard it suggested that Canadians could just hand their Canadian tax returns over to the IRS.”
That shouldn’t be necessary because the NSA can do it.
If the NSA had handed income information of everyone in the world over to the IRS, the IRS would have paid my refunds promptly (when I was a US citizen eligible for refunds of US withholding) and wouldn’t have abused me.
Hurray for the NSA, the only government agency that actually listens to people.
@DoD
“This is not as sinister as you think. Hundreds of sellers, who were not entitled to the principle residence deduction, took it anyway. This includes real estate speculators, builders, and offshore residents. The CRA needs to understand when someone is or is not entitled.”
This line of reasoning has been offered at every step of this progress, and has bedn proven false.
‘FATCA is not as sinister as you think. Millions of fat cat USCs are illegalky shirking their patriotic duty and using foreign banks to hide their wealth from the US. FATCA is nothing more than a common sense measure to ensure compliance by tax cheats.’.
I hope we all know by now that this is untrue.
“There is no provision to share this info with the IRS.”
‘There is no provision to share Canadian tax pay info with the IRS’.
That ain’t so any more, is it?
Those are just a couple of examples. What do you base your statement upon?
A little aside here – the IRS doesn’t require reporting of a principal residence unless the net proceeds exceed US$250K.
That is “the sale” of a principal residence…
“A little aside here – the IRS doesn’t require reporting of a principal residence unless the net proceeds exceed US$250K.”
Yes, and $10,000 in 1970 when FBAR came to be was worth a hell of a lot mare tha it is today. With the huge sums of money the US is printing each month, $250k will not be a large sum in the not so different future. A do not depend on them adjusting it for inflation.
Further, in 1970 there was no privision for non US residents to file FBAR. Nor was there any provision for automatic reporting.
“Further, in 1970 there was no privision for non US residents to file FBAR.”
T san, I only searched around 8 sites and couldn’t find any evidence of exemption for non US residents in 1970. Do you have evidence?
It wasn’t an exemption, it was only applied to residents of the US regardless of nationality. Congress changed the law to apply to citizens and certain nonresident aliens recently, 2009 I think.
“It wasn’t an exemption, it was only applied to residents of the US regardless of nationality. Congress changed the law to apply to citizens and certain nonresident aliens recently, 2009 I think.”
I only searched around 8 sites and couldn’t find any evidence that the law didn’t apply to the US’s diaspora in 1970. I found other kinds of changes during the 2000’s but did not find any change that would make it newly apply after not previously applying to US non resident citizens. Do you have any evidence?
It was one of the earler things I found when digging into this. As my main first source from which I dug deeper was and remains IBS, it was probably from sources cited here.
I have/had it saved. But as with everything else, it is lost in a pile of meaninglessly titled docs. As this is a huge source of trouble, one that keeps coming up, let me explain, in part, why I can not find anything with in my 9000 plus PDFs.
When first my iBooks files disappeared, I redownloaded some files to iBooks. After a few days, these too disappeared. I was back to almost the same problem I bought my iPad to solve, having to wait till I got home late at night to begin searching for materials for the next day. Instead of printing them, I could just rerereredownload to my iPad nightly, but I still had to get this done at home. Then even this stopped working as iBooks began disappearing files as soon as they were saved to it.
Quite some time later, perhaps 18 months, all my saved files returned to iBooks. But are frustratingly useless. iBooks came back with all my PDFs in the PDF collection and none in my many collections. All my collections were empty. Worse, iBooks changed the names of many of my PDFs. I saved them under the name of the article or some other name which iBooks rendered as “Japantimesarticle” 1 through 1245 or “NYTarticle” 1- 535 or “Print Template” 1 through whatever. In the time since, I have discovered that all the PDFs I resaved to iBooks are there as copies, so I have multiple copies of many, many PDFs showing under different names in iBooks.
In the wisdom of the morons who design this stuff, the “Move” function does not move files, it merely copies them in the collection AND place the recently so called moved files at the top of the PDF list meaning I must the scroll through all I just “moved” to find other docs that I have not yet “moved”. I have no way to tell which PDFs have been copied and which have not. Any document I open is moved to the top of the PDF collection and very recently, when I open a collection, all the PDFs within the collection now list at the top of the PDF collection.
During this happy journey, Western Digital, the maker of my portable external HDs, sent out an email informing their customers that their previously purchased products will no longer work with my MacBook Air, leaving Drop Box as the only place left where I stored my docs. But using Drop Box requires that I am connected to the net which is not posdible for most of my day, hence my dependence upon iBooks to store and arrange my docs. That being the case, docs are saved to Drop Box but not organized. With only the first few letters of the file name shown, it is very hard to find what I am looking for in Drop Box via my iPad.
I will try to look for this too, as I am sure I have several sources for it.
Iam able to relpy now only because my student cancelled.
I think I’ve seen assertions on this site that the IRS doesn’t ENFORCE the FBAR law against non-resident US citizens. I don’t know if it’s true or not. I’m not sure if I’ve seen assertions that the IRS didn’t previously, but then started, to ENFORCE even though the law didn’t change its applicability to non-resident US citizens. I think those who “voluntarily” (for some definition of “voluntarily”) entered into punishment programs got punished, so maybe that’s what started in 2009.