Paul Delean
Province
Q: Now appears to be a good time to buy real estate in the U.S. My wife and I are interested in areas of Florida and California. If I become a property owner in the U.S., is there a tax impact on my Canadian assets? Does U.S. estate tax apply to Canadian assets?
A: Tax partner Sydney Berger of accounting firm Bessner Gallay Kreisman says it is indeed true that Canadian assets can have an impact on U.S. estate taxes. As a non-resident of the U.S. from Canada, you’d be entitled to an exemption on U.S. estate taxes, but the amount hinges on a complex formula dividing the value of your U.S. assets by your worldwide assets.
In other words, if your U.S. real estate amounted to 15 per cent of your overall assets, you’d get only 15 per cent of the maximum credit available on U.S. estate taxes (currently $1.4 million, but dropping to $345,800 in 2011). So the size of your U.S. investment and global holdings will have a bearing on whether anything is owed in the U.S. upon death. (That payment could, in certain circumstances, be credited against income taxes in Canada on the final tax return).
If you have a query you’d like addressed in this column, please send it to Paul Delean, Montreal Gazette Business Section, Suite 200, 1010 Ste. Catherine St. W., Montreal, Que., H3B 5L1, or email pdelean@thegazette. canwest.com.
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