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Level 1

FTC for a property in the US

I have a client who sold his property in the US. We claimed the capital gain in S3.
The client received form 8828-A from his agent in the US, there was tax withheld in the US for 15% of the selling price.

I entered the tax withheld as Foreign Tax Paid in the Foreign Income screen. The amount of tax withheld didn't show in the tax return as FTC.
how to include the tax paid as foreign tax paid

3 Comments 3
Mario B
ProFile Team

FTC for a property in the US

On the Foreign form, you need to enter the Foreign capital gain  and the foreign tax paid , the currrency and the Name of the country, ex: USA then on the FTC form, at the top enter USA where is says Foreign tax credits for:

Mario B
ProFile Team

FTC for a property in the US

Hi again, the above is incorrect. what you did , to enter on S3 is probably right. Then for the FTC credit, you only need to enter on FTC form, Type USA for the Country at the top and you can enter the income  under column  Non business Real property and  Income not linked to this form box. Then you can enter the Foreign tax paid under the same column, and using box Foreign tax not linked to this form


As an example: 



Level 7

FTC for a property in the US

You have to file a US tax return (1040NR) reporting the sale of the property.  The actual tax payable (if any) will be calculated, and that is the only amount you can claim as a foreign tax credit on the Canadian tax return.  The 15% withholding is just that, a withholding, and does not qualify for the foreign tax credit.  If you have claimed it on the T1, it will get reversed upon review and you will have to provide a copy of the US tax return the taxpayer has filed.


It is the same (in reverse) as if a US resident sold a Canadian property.  They have tax withheld, file a section 216 tax return in Canada where the actual tax payable is calculated, then claim that actual tax on their US tax return.