If you live in Canada but own property in the United States, you have U.S. tax obligations related to that property regardless of where you reside. Rental income from U.S. property is taxable in the U.S., and the sale of U.S. property by a non-resident alien triggers FIRPTA withholding.
Crystal River and the surrounding Citrus County market attract Canadian buyers regularly, particularly for waterfront and retirement properties along the Nature Coast. Canadian owners who rent their Florida property must file a U.S. non-resident tax return (Form 1040-NR) to report that income. When they sell, the buyer is required to withhold 15 percent of the gross sale price under FIRPTA unless a withholding certificate reduces the amount.
The U.S.-Canada tax treaty provides some relief and credits to avoid double taxation, but it does not eliminate U.S. filing obligations. Both a U.S. CPA familiar with non-resident taxation and a Canadian tax professional should be involved to ensure compliance on both sides of the border.
Kevin Neely & Kaitlynd Robbins | K2 Sells
Yes, you will owe US taxes when you sell. As a Canadian citizen selling US property, FIRPTA applies to you. That means the buyer is required to withhold a percentage of the gross sale price at closing and send it to the IRS. The standard withholding is 15 percent, but if the sale price is under $300K and the buyer plans to use it as a primary residence, it can drop to zero. Between $300K and $1 million with a primary residence buyer, it drops to 10 percent.
That withholding is not your final tax bill. It's a prepayment. You'll need to file a US tax return for the year you sell, and the IRS will calculate your actual capital gains tax based on your profit, not the sale price. If they withheld more than you owe, you get a refund. If you owe more, you pay the difference. You may also need to report the sale on your Canadian tax return, but Canada and the US have a tax treaty to help avoid being taxed twice on the same gain. Talk to a cross-border tax professional before you close so you're not caught off guard on either side.
On the agent commission, that's negotiable and varies by market, but you can generally expect somewhere in the range of 5 to 6 percent of the sale price total, split between the listing agent and the buyer's agent. Your listing agent will walk you through exactly how compensation is structured before you sign the listing agreement.
One more thing. Since this involves cross-border tax obligations, don't try to figure out the FIRPTA withholding and Canadian reporting on your own. A CPA or tax attorney who handles US-Canada transactions will save you money and headaches.
Barrett Henry
Broker Associate | REALTOR®
RE/MAX Collective · The NOW Team
Tampa Bay, Florida
nowtb.com
Yes, you will owe US taxes on the sale. As a Canadian selling US property, FIRPTA applies and the buyer is required to withhold 15 percent of the sale price at closing and send it to the IRS. That withholding is not necessarily your final tax bill but it is the IRS making sure they collect before you leave the country. You will need to file a US tax return for the year of the sale to settle up, and a US tax professional can help you apply for a reduced withholding certificate beforehand if your actual gain is less than 15 percent of the sale price. Canada and the US have a tax treaty that may reduce double taxation, so filing in both countries with professional help is worth it.
On agent commission, mobile home sales in a park or community typically run somewhere between five and ten percent depending on the market and whether the unit includes land. If it is a mobile home in a land lease community the commission tends to be on the higher end since the buyer pool is smaller and the transaction takes more work. Confirm the rate upfront with your agent before signing a listing agreement.
You will generally have withholdings, though the best person to answer this or any tax questions would be an accountant or CPA. "What percentage will I pay an agent to sell my unit" is a completely different topic. Commission is completely negotiable between you and the agent you hire.
You can use your 401K to buy a home. Some employers allow you to take out a loan from their 401(k) for various purposes, including buying a home. Keep in mind the loan must typically be repaid within a specified period, often five years, and failure to repay it may result in penalties and taxes. Before tapping into your 401K understand the terms and consequences of a 401(k) loan before proceeding. An alternative might be a down payment assistance grant if you qualify.
