[Music]
how to report the sale of a US rental
property hi my name is Alan Madden from
Madden Chartered Accountant in today's
video I will show you how to report the
sale of a u.s. rental property on a US
tax return before watching this video I
recommend that you watch my two-part
series how to prepare a 1040
non-resident tax return for US rental
properties let's look at the example of
Justin trupo a Canadian resident who
owns a US rental property he purchased
the property in 2014 for $100,000 he
sold the property on December 31st 2016
for $130,000
Justin paid a commission of 2002 as a
real estate agent for selling the
property at the end of 2016
justin has claimed total depreciation of
ten thousand six hundred and six dollars
since he purchased the property
justin has to complete form four seven
nine seven sale of business property on
page one of this form he should write
his name at the top in his US tax
identification number on page two Justin
should write a description of the
property example building the date the
property was purchased and the date the
property was sold next Justin has to
calculate the adjusted basis or tax cost
of his rental property as follows
purchase price 100,000 plus commissions
two thousand less depreciation to date
ten thousand six hundred and six
adjusted basis is equal to 90 1394 the
difference between the selling price of
a hundred thirty thousand and the
adjusted basis of ninety one thousand
three ninety four gives rise to a
capital gain of thirty eight thousand
six hundred and six dollars
[Music]
[Music]
the next step is to complete Schedule D
but first you need to understand the
difference between long term and short
term capital gains capital gains can
either be treated as long term or short
term long term gains arise from a
property that is owned for at least one
year prior to sale short term gains
arise from a property that is sold
within one year of purchasing it the
reason this distinction is important is
because long term capital gains have a
lower tax rate since Justin owned the
property for more than one year he
reported the capital gain of thirty
eight thousand six hundred and six
dollars in part two of Schedule D called
long term capital gains remember to also
report this capital gain and the
depreciation claim to date on page two
of Schedule D the final step is to
report the capital gain of thirty eight
thousand 6:06 on line 14 of Justin's US
tax eternal this capital gain will be
added to Justin's total income for more
tax tips please click on the subscribe
button below and visit our website feel
free to follow us on Twitter Facebook
Instagram and Google+ don't forget to
like comment and subscribe to our
YouTube channel see you soon and thanks
for watching