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US Property Owners and Snowbirds be Aware of US Tax Rules


Many Canadians have been taking advantage of the low prices of vacation homes in the US to purchase real estate and escaping south to avoid our harsh winters. Those who do so should be aware that upon death anyone holding US property could be required to pay an estate tax to Uncle Sam. Currently there is a 5 million exemption in place, which means if your complete estate, Canadian and US is valued at less than 5 million there is no requirement to pay US estate tax. The 5 million exemption is due to expire however at the end of this year, and unless the US renews or replaces this exemption it is due to return to 1 million as it used to be. This could catch many individuals investing in US property as the 1 million includes the combination of Canadian and US assets. US estate tax is a maximum of 35% of the estate value in excess of the exemption, prorated by the fraction of US assets divided by worldwide assets.

Canadians who rent out or sell their US vacation homes should check into US tax requirements regarding those items as well.

Canadians spending time in the US should also be aware of the rule for determining the number of days you can spend in the US without having to file a US tax return. The formula for calculating this is as follows: (current year stay in days) + (previous year stay)/3 + (year before stay)/6 = (not to exceed 182) If you were to be in the US 120 days every year, you would have no problem.