Are Canadians subject to capital gains taxes when they sell?
Withholding tax (see FIRPTA and withholding tax FAQs) is the mechanism for the Internal Revenue Service (IRS) to collect taxes, but does not represent the final determination of the amount of tax owed on a sale of the property by a Canadian investor. For property held for more than 12 months, whether by an individual or a business entity, it is taxed on its net gain from the sale of U.S. real property at long-term capital gain rates. Assets held by an individual for more than 12 months are taxed at a maximum rate of 15% upon disposition. Recaptured depreciation that may be a part of the net profit upon liquidation is taxed at a rate of 25%. The amount of tax withheld offsets the amount of tax that the Canadian investor actually owes on the sale of the property. If an individual owns and disposes of the property within 12 months of acquiring the property, the individual will be subject to tax at the higher ordinary income tax rates. Assets held by a corporation are taxed at rates betwee
