American buys house in Canada and pays GST of over $15K plus $5K other taxes. Question: Can they show that on Sch A, either under state and local taxes ( it says you can add motor vehicles, airplanes, boats and houses) or under foreign taxes paid?
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Maybe
...and I'm hardly an authority. Maybe someone from upper NY, MN, WA, or MI has dealt with this.
I say yes, however, IRS may limit the deduction to the sales tax that would have been paid had the house been acquired in his home state, or the GST, whichever is lower. I believe the "Foreign tax credit" to be limited to taxes on income. -
this is gonna be a dumb question/comment, but
why did he pay GST to begin with?Originally posted by ecb34691 View Post
as a non-canadian is he not exempt from gst?
i have never paid any for any internet purchase i have made -- i know, i know, i have never bought a house over the internet.
but i am making this post to educate me? is there something in canadian law that says a non-canadian is exempt from gst except when buying a house??Just because I look dumb does not mean I am not.Comment
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When you are traveling in Canada, you pay GST on purchases, then file for a refund from Canada if you take those goods out of the country. I would assume he did not take the house back to the US. The foreign tax deduction is for income taxes (form 1116), not sales taxes. Pub 17 says for itemized deduction purposes, you can deduct state and local sales taxes. It says nothing about sales taxes paid to a foreign country, and I do not believe it would be deductible.Comment
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thanks
for your reply. i agree with you on all points.Originally posted by Burke View Post
the way i interpreted the question was that the american was in america when the purchase was made [paperwork through realtor/lawyer/whatever, etc.] and should therefore be GST-exempt [in my opinion] since he is non-canadian and not in canada.Just because I look dumb does not mean I am not.Comment
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