Thinking of Selling Your U.S. Home? Read This First.

If you’re ready for a lifestyle change or to cash in on the appreciation you’ve seen on your U.S. home, you may be thinking about selling your property.

Before you do, make sure you take into account all of the expenses involved with selling your U.S. home, such as:

  • Closing costs and other related expenses
  • Capital gains taxes on any profits you make
  • Seller’s agent fees, which are usually 5-6% of the sale price

Selling a U.S. home is different than selling a Canadian property. It helps to have a U.S. real estate agent who specializes in helping. Canadians and a cross-border tax or legal expert who can help you navigate the tax laws.

Top Things to Know Before Selling Your U.S. Home

If you sell your home for more than you paid for it, you may be required to pay tax on the difference, minus some expenses — known as capital gains tax. In addition, your tax obligation falls to the U.S. government first, even though you’re a Canadian resident.

You will also have to report the sale — and any gains or losses you had — in Canada. Thankfully, the Canada-U.S. Tax Treaty is set up to avoid double taxation.

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Selling Your U.S. Property? 5 Things Canadians Need to Know

If you sell your U.S. home, you may also be subject to withholding rules under the Foreign Investment in Real Property Tax Act (FIRPTA). These rules state that 15% of the sale price has to be remitted to the Internal Revenue Service (IRS) at the time of the sale.

This withholding makes sure you meet your U.S. income tax obligations. The good news is, after your U.S. tax return has been processed, the IRS will refund the balance to you. There are also some exceptions that can help you to reduce or eliminate the withholding requirement.

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Selling Your U.S. Property? 5 Things Canadians Need to Know

Selling a U.S. home can involve complex rules and payments to the government, so it’s smart to plan ahead for the sale. A U.S. real estate agent who is experienced in selling Canadian-owned property and a tax expert or lawyer with cross-border expertise can be invaluable.

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Selling Your U.S. Property? 5 Things Canadians Need to Know

Consider Other Ways to Access Your Home Equity

If the main reason you want to sell your home is to tap into your U.S. equity, there may be more affordable options than selling.

For example, refinancing or a Home Equity Line of Credit (HELOC) both let you access the equity you’ve built up. Best of all, you get to keep your home and lifestyle, which you might miss next winter!

Learn more about Using Your U.S. Equity.

If You Do Sell, Would You Like to Earn Up to $6,500?

If you’re not already working with a real estate agent, you could receive up to $6,500 when you sign up for RBC U.S. HomePlus™ Rewards and use a participating agent to sell your home.38

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Selling and buying another U.S. home? You could get up to $13,000!

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