Canadians who own real estate in the United States may be subject to estate tax. There are a number of factors related to such property that must be considered in order to fully understand what is involved.
Here are answers to some frequently asked questions our U.S. tax experts have received on this topic.
Q: What is the U.S. estate tax?
A: The U.S. estate tax is a tax that is payable by non-residents of the U.S. who own property in the U.S. at death. This estate tax is calculated on the fair market value of property located in the U.S. at the time of death.
Q: If at the time of my death I own real estate in Florida valued at $1,000,000, do I have to pay the U.S. estate tax?
A: For the year 2018, if the value of your worldwide estate is less than $11,200,000 (including your RRSPs), no estate tax is payable upon death. However, if the value of your worldwide estate is greater than this amount, you should consult a tax adviser from Raymond Chabot Grant Thornton.
Q: If at the time of my death, I own real estate in the U.S. but no estate tax is payable, do any U.S. tax forms still have to be filed?
A: Yes. The requirement to file form 706-NA is mandatory if, at the time of your death, you own property in the U.S. valued at over US$60,000.
Q: What is the best way to own real estate in the U.S. (condo/house)?
A: It all depends on the facts at hand, and as such, each case must be assessed individually. You should always consult your tax adviser before buying property in the U.S.
Q: Could other fees be payable at the time of my death if I own real estate in the U.S.?
A: Yes, probate fees could be payable to the State. Some planning options can make it possible to avoid probate fees.
Q: Should I prepare a mandate in case of incapacity if I own real estate in the U.S.?
A: The Canadian mandate in case of incapacity is not recognized in the U.S. You should therefore have a durable power of attorney which is recognized in the U.S.
Q: Should I amend my Canadian will if I own real estate in the U.S.?
A: In some cases it would be preferable to have a specific, English-language will for that property. Such a specific will could make it easier to transfer the property to the heirs at the time of death.
Do you have questions relating to U.S. tax issues? Our tax experts can help you.
25 Jan 2018 | Written by :