卖美国房产时哪两种情况能免除预扣税

US Taxation of Canadian Snowbirds


Many retirees and other Canadians fly to Florida or other locations in the southern United States for several months out of the year. However, the Internal Revenue Service (IRS) may have a few unpleasant surprises for the unwary. Below we provide a brief overview of the potential tax pitfalls — and how to avoid them — when visiting the US for several months out of the year. We also summarize the rules for renting out or selling one’s real estate in the US and set out strategies to minimize the effect of US estate taxes.

Residence Rules
Canadian snowbirds who stay for long periods of time in the US should be aware of the requirements for the physical presence test, lest they be considered a US resident for income tax purposes. If that happens, a Canadian will be required to file a US tax return and may be required to file a US income tax return to report income from all sources, including income from Canada. If a foreign national has never spent more than 121 days in the US in any tax year, he or she will never be considered a US resident under the substantial presence test.

Renting Your Property
Snowbirds who rent out their Florida condo or other real estate located in the US should beware: a withholding tax of 30% normally applies to the gross amount of any rent paid to a resident of Canada on real estate located in the US Unlike withholding taxes on interest and dividends, this tax is not reduced by the Canada-US tax treaty.

One way for Canadians to avoid the 30% gross withholding tax is to file a US tax return and elect to pay tax on net rental income. The Canadian resident can then receive a refund for any taxes withheld, to the extent the withholding amount exceeds the tax payable. This is most likely to be advantageous where one incurs significant expenses (mortgage interest, maintenance, insurance, property management, property taxes, etc.), as tax at the graduated rates will likely be substantially lower than the 30% withholding tax.

Once elected, the net rental income method applies for all future years and may be revoked only in limited circumstances. The election applies to all of an individual’s rental real estate in the US. Also note that state tax (and possibly city tax) may be payable on the rental income, if the election is made on the federal return. Once the election is made, the taxpayer should provide IRS Form W-8ECI to the tenant, and the 30% withholding will not be required.

Selling Your Property
If a Canadian sells real estate located in the US, a withholding tax of 10% of the gross sales price is normally payable under the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA). The tax withheld can be offset against the US income tax payable on any gain realized on the sale and refunded if it exceeds the tax liability. The 10% withholding requirement on the gross sales price applies regardless of the seller’s adjusted basis in the property.

卖美国房产时哪两种情况能免除预扣税

There are two exceptions to FIRPTA’s 10% withholding requirement which may reduce or eliminate the requirement.

If an application for a withholding certificate with respect to a transfer of a US real property interest is submitted to the IRS but has not been received at the time of the transfer, the buyer must withhold 10 percent of the amount realized. However, the amount withheld, or a lesser amount as determined by the IRS, need not be reported and paid to the IRS until the 20th day following the IRS's final determination regarding the application. Therefore, the buyer’s legal representative would generally hold the 10% withholding in an escrow account until the withholding certificate is received and then refund the seller the amount permitted pursuant to the withholding certificate. If the seller does not apply for the withholding certificate, he or she must wait until after year-end to file a tax return to claim a refund for the excess of the withholding amount over the ultimate tax liability.

Filing Requirements
For income tax purposes, a Canadian must file a US federal tax return and report the gain on the sale of US real estate. The resulting tax will be offset by the FIRPTA tax withheld. An individual may also be subject to state income tax withholding and filing requirements. Some states do not have a state income tax on individuals, including Florida, Texas, Washington, South Dakota and Alaska.

If an individual owned the property and has been resident in Canada since before September 27, 1980 he or she can likely take advantage of the Canada-US tax treaty to reduce the gain. In such a case, only the gain accruing since January 1, 1985 will be taxed. This transitional rule does not apply to business properties that are part of a permanent establishment in the US
To claim the benefit under the treaty, a Canadian should make the claim on a US tax return and include a statement containing certain specific information about the transaction.

US tax on the sale of US property will generate a foreign tax credit that may be used to reduce the Canadian tax on the sale. However, if the amount of the gain taxed in Canada is reduced due to the principal residence exemption, the foreign tax credit available may be limited. Additionally, a strengthening Canadian dollar in relation to the US dollar may result in a larger taxable gain in the US than in Canada. The opposite is true if the Canadian dollar declines in value from the date of acquisition.

Minimizing Estate Taxes
US estate taxes can impose a burden on the estate of Canadians who own US real estate at death. See Chapter 8, “US Estate Tax for Canadians”, for an overviews the estate tax rules. Here are some planning ideas.

Hold Property Through a Canadian Corporation
One solution to US estate tax is to hold real estate in a Canadian corporation rather than personally. Since shares of a Canadian corporation are not considered property situated within the U.S, no US estate tax will apply. Ordinarily, if the US real estate is used personally by a Canadian shareholder, the Canadian would have to recognize a taxable benefit for Canadian tax purposes equal to the value of the rental usage of the property, unless the shareholder pays the rental value to the corporation. The Canada Revenue Agency (CRA) used to have a liberal administrative policy not to assess a taxable shareholder benefit for personal use of a corporate-owned US vacation property, if it was owned by a “single purpose corporation” that met certain requirements. However, the CRA revoked this policy for property acquired by or transferred to a single purpose corporation after 2004. Single purpose corporations properly structured to acquire US real estate prior to 2005 continue to be covered by CRA’s prior policy.

For US estate tax purposes, there may be an issue as to whether the IRS will respect the single purpose corporation as the true owner of the property. If the single purpose corporation is the nominal owner of the property on behalf of the Canadian shareholder or the corporation is deemed to be the owner on behalf of a shareholder, the IRS may ignore the corporation for estate tax purposes. Consequently, the shareholder of a single purpose corporation may be exposed to the US estate tax, regardless of the corporate ownership of the property. This exposure is exacerbated for single purpose corporations, because compliance with CRA guidelines (for property acquired prior to 2005) effectively causes the corporation to be viewed as a mere nominee of the shareholder.

Owning US real estate through a corporation can significantly increase the income tax arising from the sale of US real estate. Current US federal tax law provides a maximum income tax rate of 15% on long-term capital gains (gains from the sale of capital assets held for at least 12 months). There are no preferential rates for capital gains recognized by a corporation. The federal corporate tax rate on such gains can be as high as 35%. Further, some states impose a higher tax rate on gains of a corporation. For example, although Florida has no individual income tax, it imposes tax at a rate of 5.5% on corporations realizing capital gains on Florida real estate. Therefore, the federal and Florida tax rate on the sale of a Florida vacation home could exceed 40% if sold by a corporation but would generally be limited to 15% if sold by an individual.

Although these taxes may be less than the potential US estate tax, the ultimate cost of the Canadian corporate structure should be weighed against the potential benefits. The likelihood of selling the property prior to death should also be considered.

Split Interest
A technique to reduce exposure to the US estate tax is split interest ownership of the property. Under such an arrangement, an individual would acquire a life interest in US property, and his or her children would acquire the remainder interest in the property. Upon the death of the individual, there would be no estate tax on the life interest, since the life interest would have no value on death. However, should the children die while holding a remainder interest, the estate tax would be assessed on the value of the remainder interest. Generally, the children can obtain term life insurance at low costs (due to their age) to protect them from estate tax exposure.
A split interest arrangement usually involves a trust or partnership structure. The structure may result in significant complexities. However, the tax savings may be worthwhile for certain family situations.

Non-recourse Debt Financing
A non-recourse mortgage outstanding on US real estate reduces the value of the property included in an individual’s taxable estate. A non-recourse mortgage is one that entitles the lender to have recourse only against the property mortgaged. If an individual defaults on payment, the mortgaged property can be seized, but there will be no further liability if the value of the property does not satisfy the debt.

However, it may be difficult to obtain a mortgage on a non-recourse basis. Consequently, it may be necessary to seek other sources. One possible source of non-recourse financing may be a spouse. For example, assume a wife has $100,000 to invest in a US vacation home. Instead of investing directly, she could loan her husband $100,000 on a non-recourse basis to acquire the property. Should he die, there will be no value in the estate, since he will deduct the non-recourse debt from the value of the property situated in the US. If she dies, there will be no value in the estate since the loan is not property situated in the US. In order to be respected as true debt, the debt should have commercial characteristics such as a market rate of interest and repayment terms. This may create a problem since the wife would have interest income for Canadian tax purposes and the husband would have no interest expense deduction. Since the US rules do not specify that the funds received from the mortgage must be used to acquire the US property, it may be possible for the husband to acquire investment assets with the funds received, which may allow for a deductible carrying charge for Canadian tax purposes.

Another problem with non-recourse debt is that the debt does not increase as the property appreciates. Consequently, should the property substantially appreciate in value and/or the principal of the debt be repaid, the debt will offset less of the value of the property.

Partnership Structure
Although this is an unsettled area of law, it is arguable that a Canadian partnership holding personal-use US real property is not property situated in the US and therefore will shelter the Canadian partner from US estate tax.
Another strategy is for such a partnership to elect “corporate” status for US tax purposes, such that the partnership will be considered a foreign corporation for US tax purposes and therefore exempt from US estate tax; in order to make this election, the partnership must have some business activities beyond just the holding of personal-use real estate. One attractive feature of this strategy is that, since the partnership will continue to be recognized as a partnership for Canadian tax purposes, the Canadian partner will not have a “shareholder benefit” (as this only applies to shareholders of a corporation). However, since the partnership will be considered a corporation for US tax purposes, the tax arising from the sale of the property will not be eligible for the lower individual tax rates.
Under certain circumstances, it may be possible to elect “corporate status” for US tax purposes after the date of death of the partner; this will allow individual income tax rates on the sale of the property before death and also provide insulation from the estate tax on death. This is a complex strategy that requires extreme care in both planning and implementation.

Review US Estate Tax Plans
Although the US-Canada tax treaty reduces the US estate tax bite for many Canadians holding US property – generally those with total estates under US $2 million – it will not provide complete relief for larger estates and others. Although insurance proceeds of a Canadian are not subject to US estate tax, the insurance proceeds can substantially increase the value of a decedent’s estate at death. It is important to assess the impact of the US estate tax on a Canadian resident’s death and consider the available strategies to minimize both Canadian and US death taxes. A properly drafted will is a minimum. In many cases, careful estate planning should be considered well in advance of acquisitions of US situs property.

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From: http://www.amchamcanada.ca/business-in-us/tax-issues/US_Taxation_of_Canadian_Snowbirds