Canadian Resident Selling Hawaii timeshare

[Dinahbear]

Could someone tell me if there are US taxes I have to pay if we (Canadian residents) sell our Hawaii timeshare? We are selling for less than we bought. Our realtor mentioned having to pay US taxes on our sale price? Can someone explain

 

[goaliedave]

Could someone tell me if there are US taxes I have to pay if we (Canadian residents) sell our Hawaii timeshare? We are selling for less than we bought. Our realtor mentioned having to pay US taxes on our sale price? Can someone explain

Why wouldn't you just ask your realtor who mentioned it?

Here is the govt link for forms and contact #

HARPTA – Withholding Tax on Sales of Hawaii Real Property by Nonresident Persons | Department of Taxation

tax.hawaii.gov

Sent from my SM-A505G using Tapatalk

 

[SmithOp]

There is no US Tax on a loss.

Sent from my SM-G970U using Tapatalk

 

[goaliedave]

There is no US Tax on a loss.

Sent from my SM-G970U using Tapatalk

Wrong. You are thinking of "income" taxes only. There are many kinds of taxes.

Why anyone would ask a tax question on a social media forum rather than contact an expert is beyond me. Too many incorrect posts.

Sent from my SM-A505G using Tapatalk

 

[Dinahbear]

Don't reply Goaliedave if you can't be kind
There is a lot of people on here who sell timeshares and may have experience with this. No need to be rude

 

[dgalati]

Don't reply Goaliedave if you can't be kind
There is a lot of people on here who sell timeshares and may have experience with this. No need to be rude

Yes try to reply with some respect to fellow tug posters.

 

[sjsharkie]

Could someone tell me if there are US taxes I have to pay if we (Canadian residents) sell our Hawaii timeshare? We are selling for less than we bought. Our realtor mentioned having to pay US taxes on our sale price? Can someone explain

DISCLAIMER: This is not tax advice; this is for discussion purposes only.

FIRPTA, which is the law I think your realtor is referring to, applies to timeshares even if they are sold at a loss. 15% federal withholding (and state withholding if applicable) is required at time of sale to foreign nationals. The foreign national can then file a federal return to report gain/loss and obtain a refund, if applicable.

There is one exception that MAY apply:
You (the transferee) acquire the property for use as a residence and the amount realized (sales price) is not more than $300,000. You or a member of your family must have definite plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two 12-month periods following the date of transfer. When counting the number of days that the property is used, do not count the days the property will be vacant. For this exception, the transferee must be an individual.

However, going about proving the above with a timeshare interval may be difficult, and not sure whether the rule can be applied to a specific interval. For the amount of a timeshare selling price, it might just be easier to have them do the withholding, file the return and wait for the refund. Since you already are working with a realtor per your post, you may want to inquire with them.

Good luck

-ryan

 

[alwysonvac]

Could someone tell me if there are US taxes I have to pay if we (Canadian residents) sell our Hawaii timeshare? We are selling for less than we bought. Our realtor mentioned having to pay US taxes on our sale price? Can someone explain

Last year, I bought a 2nd week at the HGVC Lagoon Tower in Hawaii (2 Bedroom Plus EOYE Platinum season for $7k) from Diane Nadeau (diane@timesharebrokersales.com). Old Republic Title & Escrow of Hawaii included a 8288 Form (U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests) in my closing documents. As a US buyer, I had to complete my section which indicated the resale price and the tax withholding for the Japanese sellers which was 15% ($1050 of the $7000) - see attachments below.

https://www.irs.gov/forms-pubs/about-form-8288

 

[Dinahbear]

Thank you. She is our realtor too. Hope she can walk us through the process of reclaiming the refund of them withholding this amount

 

[alwysonvac]

Thank you. She is our realtor too. Hope she can walk us through the process of reclaiming the refund of them withholding this amount

You’re welcome.
Please report back for others who may have to go through this process.

 

[sjsharkie]

Thank you. She is our realtor too. Hope she can walk us through the process of reclaiming the refund of them withholding this amount

You will need to file a non resident tax form with the IRS to get it back ... 1040NR. Claim the loss on the sale and you should get withholding back.

Ryan

Sent from my SM-G965U using Tapatalk

 

[VanX]

Normal to have a 30% holdback on sale of assets in the US owned by Canadians, includes stocks and real estate.

Many Canadian investors get surprised by this after selling.

 

[sjsharkie]

Normal to have a 30% holdback on sale of assets in the US owned by Canadians, includes stocks and real estate.

Is this Canadian law?

FIRPTA does not discriminate against Canadians -- it is 15% standard withholding for any foreign national selling real estate (including timeshares) with limited exceptions. Buyer or buyer's agent is typically responsible to withhold.

-ryan

 

[VanX]

Bought in America and the rules are enforced there as a holdback.

30% is simply what we’ve been aware of. Nice though if it’s only 15%

A paid for professional would know

 

[goaliedave]

Bought in America and the rules are enforced there as a holdback.

30% is simply what we’ve been aware of. Nice though if it’s only 15%

A paid for professional would know

Why waste money on a paid for professional when random posters on social media can provide contrasting opinions?

Sent from my SM-A505G using Tapatalk

 

[sjsharkie]

Why waste money on a paid for professional when random posters on social media can provide contrasting opinions?

For doubters like you, here is a link to the specific FIRPTA withholding requirements direct from the IRS. This is not complicated -- it is 15% that is withheld by the buyer or buyer's agent at sale with a few exceptions.

FIRPTA withholding | Internal Revenue Service

Information on the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) and how it affects a foreign person with real property interest.

www.irs.gov

I do have credentials to back me up in this area, but I shouldn't have to and won't share them as this is not professional advice. If you or the OP would like to pay a professional tax expert to provide you the same advice professionally, then please do. Not sure why you are berating people trying to help but this is my last post on this subject. Yeesh...

-ryan

 

[goaliedave]

Perhaps look up what "contrasting opinions" means and ponder a bit, then you'll see why paying for an appointment with a professional is best.

Sent from my SM-A505G using Tapatalk