one can gift on an annual basis. The excess is subject to gift tax. However, my very sophisticated Canadian tax accountant states that a gift of any asset is considered to be a disposition for Canadian income tax purposes. (You can gift any asset to your spouse without incurring Canadian income tax.) A gift to your children or anyone else would crystalize any accrued capital gains and the tax rate is about 27%. If you gift U.S. real property, you would also incur U.S. gift tax on the value (not the gain). I believe that the rate is about 40%. There are ways to do it to reduce, and perhaps avoid, the U.S. tax – consult a U.S. accounting professional. A final note on our wills: Mr. Weylie has written an article addressing this and other issues later in the magazine. It is possible and sometimes advantageous to have several wills relating to specific items. I personally have three – one for normal stuff, one for properties and one for my collections. I recommend that you leave charities a specific amount of money – not a percentage or a residual amount. Leaving charities some of your stocks which have capital gains, rather than cash, can be very advantageous. In a perfect world, you will discuss your will and its contents with a U.S. tax lawyer and a U.S. accounting professional, as well as their Canadian counterparts. Do this now, during the planning stage, for best results. BirdTalk Featuring the letters & concerns of our members SEND YOUR LETTERS TO Bird Talk, c/o CSANews 180 Lesmill Road Toronto, Ontario M3B 2T5 or by e-mail: csawriteus@snowbirds.org Bird Talk Iroquois, Toronto, Caledon Hills, Dufferin Hi-Land, Blue Mountains, Beaver Valley, Sydenham and Peninsula, from Queenston, Ontario along the escarpment all the way to Tobermory, Ontario, a trail of more than 800 km. One can get more information from the BRUCE TRAIL CONSERVANCY at: 55 Head St., Unit 101, Dundas, ON L9H 3H8 Toll-free 1-800-665-4453 Tel: 905-529-6821 E-mail: info@brucetrail.org Website: www.brucetrail.org Bill and Lydia MacGregor Ontario Ed.: Sometimes a free ad makes sense. Dear Bird Talk, I’m interested in knowing the ins and outs (insurance, registration, etc.) of leaving a car in Florida year-round. This would eliminate the need for a 4,100-mile round trip each year. Two options – leave a car purchased in Canada or buy a car in Florida and leave it there. Patrick Woods Saint John, NB Ed.: The only real option is to just buy a car in the U.S. They are fairly inexpensive when compared to Canadian prices, too. If you purchase from a dealer, they will do all of the paperwork. I have imported cars in the past and it is time-consuming and a bit complicated, but it certainly can be done if you are truly in love with your current car. Dear Bird Talk, My wife and I own a mobile home in a resident-owned park in Florida. We own a share plus a home. It now looks as if our park is being sold to a private owner. Our park was a not-for-profit association. If the sale happens, we will be receiving money for our boughtout share. Do we need to report this capital gain to the IRS and, if so, does anybody know at what percentage the taxation rate will be? Perry Lalonde Ontario Ed.: Yes; Wallace Weylie, CSA’s legal advisor, says that any capital gain would have to be reported to the IRS. Probably, the gain could be divided by two, one half to each owner, and they would be able to take two exemptions, which this year was $4,050 each. The tax rate is 20% of the taxable gain. Dear Bird Talk, My wife and I own a home in Arizona and are thinking of transferring ownership to our son, who lives in Arizona. We bought the house in 2006. We live in Canada. Would we have any capital gain to report, as this is not a sale but a gift to our son? Then could he not assume the house for our original purchase price? Wes Berg Cochrane, AB Ed.: This is a little more complicated. Mr. Weylie states that your U.S. property can be passed on to your son without paying U.S. capital gains tax. However, the concern should be about gift tax. Unlike Canada, where one can gift unlimited amounts, the U.S. has limits on the amount which CSANews | FALL 2018 | 9
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