It is officially April 2026, and the tax landscape for Canadians owning property south of the border has fundamentally shifted. If you’ve been keeping an eye on the news over the last couple of years, you know that the Canadian federal government introduced significant changes to the capital gains inclusion rate. Now that these rules are in full effect, the question isn’t just “Can I sell my US property?” but rather “How much of the profit will I actually get to keep?”
For many of our members at Canada to USA, their vacation homes in Arizona or rental condos in Florida aren’t just lifestyle choices, they are major financial assets. Whether you are looking to downsize, relocate, or simply cash out on the massive appreciation we’ve seen in the US market, understanding the 2026 tax reality is essential.
The 2026 Reality: The 66.7% Inclusion Rate
The biggest change we are dealing with this year is the inclusion rate. For over two decades, Canadians enjoyed a 50% inclusion rate on capital gains. This meant if you made a $300,000 profit, only $150,000 was added to your taxable income.
As of the new legislation that hit full stride in 2026, the inclusion rate for individuals has jumped to two-thirds (66.7%) for any capital gains realized in a year that exceed $250,000. For corporations and most types of trusts, that 66.7% rate applies to the very first dollar of capital gains.
If you are Canadians selling US real estate in 2026, this math matters. If your gain on a Scottsdale villa or a Tampa townhome is $400,000, you are now looking at a significantly higher tax bill in Canada than you would have two years ago. The first $250,000 is still taxed at the old 50% rate, but that remaining $150,000 is hit at the 66.7% rate.
Worldwide Income: Why the CRA Cares About Your Florida Condo
One of the most common misconceptions we hear is: “It’s a US property, so I only pay US taxes, right?”
Unfortunately, no. As a Canadian tax resident, you are taxed on your worldwide income. When you sell a property anywhere in the world, the CRA expects you to report that gain on your Canadian tax return. Because the property is located in the US, the Internal Revenue Service (IRS) also wants their share. This creates a “double tax” event.
This is where cross border living and tax planning for Canadians becomes vital. You have to navigate the US tax rules (Internal Revenue Code) and the Canadian rules (Income Tax Act) simultaneously.
FIRPTA for Canadians: The 15% IRS “Deposit”
Before you even worry about the CRA, you have to deal with the IRS. Under the Foreign Investment in Real Property Tax Act (FIRPTA), the buyer is legally required to withhold 15% of the gross sales price (not the profit!) and send it directly to the IRS.
For example, if you sell your West Palm Beach home for $1,000,000, the IRS takes $150,000 right off the top. This is a massive hit to your cash flow at the closing table. FIRPTA for Canadians can be particularly frustrating because that 15% often exceeds the actual tax you owe.
At Canada to USA, we work with tax experts who specialize in reducing or even eliminating this withholding before the sale closes by filing for a Withholding Certificate (Form 8288-B). If you’ve already sold and had the money withheld, we can help you file the necessary US tax returns to get that refund back as quickly as possible.
The Foreign Tax Credit: Your Savior (With a Catch)
To prevent you from being taxed twice on the same dollar, Canada and the US have a tax treaty. This allows you to claim a Foreign Tax Credit (FTC) on your Canadian return for the taxes you paid to the IRS.
In a perfect world, the FTC wipes out your Canadian tax liability. However, with the 2026 increase in the Canadian inclusion rate, we are seeing more “tax gaps.” If your effective tax rate in Canada on that 66.7% inclusion is higher than the tax you paid in the US, you will still owe the CRA the difference.
This is why “winging it” with a local accountant who doesn’t understand cross-border nuances can be a multi-thousand-dollar mistake. You need a strategy that looks at both sides of the border to ensure you aren’t leaving money on the table.
Why the $250,000 Threshold is Tricky
The $250,000 threshold for individuals is an annual limit. If you are selling multiple assets in 2026: say, a US rental property and some high-value stocks in your non-registered account: you need to time these sales carefully.
If you trigger all those gains in the same calendar year, you will almost certainly blow past the $250,000 limit and face the 66.7% inclusion rate. If you have the flexibility to split sales across two tax years, you might be able to keep more of your gains in the 50% bracket.
Repatriating Your Funds: Don’t Lose 3% to the Bank
Once the sale is closed, FIRPTA is handled, and the taxes are accounted for, you still have to get your money back to Canada. This is where many Canadians make a quiet, expensive mistake.
When you move $500,000 or $1,000,000 from a US title company back to a Canadian bank, the “big banks” typically take a massive spread on the currency exchange. It’s not uncommon to lose 2% to 3% of your total proceeds just in the conversion from USD to CAD. On a million-dollar sale, that’s $20,000 to $30,000 gone for no reason.
Canada to USA members get access to exclusive currency exchange discounts that significantly beat the retail bank rates. Whether you are a snowbird moving proceeds from a vacation home or a business owner using currency exchange for businesses, we ensure the bulk of your profit actually makes it into your pocket.
Selling in the Right Market: Arizona and Florida
Despite the tax changes, the demand for US real estate remains high. If you are considering selling, you need an agent who understands the Canadian perspective: someone who knows how to market your property to both Americans and fellow Canadians.
We have built a network of specialized real estate agents in high-demand areas:
- Arizona: If you are looking at Scottsdale real estate or homes in retirement communities, we have the boots on the ground to help.
- Florida: From West Palm Beach to Tampa real estate, our agents understand the specific needs of Canadian sellers.
Selling a US property as a non-resident involves more paperwork and specific legal requirements than a standard domestic sale. Working with an agent who has handled dozens of Canadian “exit” sales is the best way to ensure a smooth closing.
Summary of What to Do Now
If you are planning to sell your US property in 2026, here is your checklist:
- Calculate Your Gain: Determine your original purchase price (in USD) and include all capital improvements. Convert these to CAD using the exchange rate from the date of purchase.
- Estimate the Tax Impact: Determine if your gain will exceed the $250,000 threshold for the year.
- Plan for FIRPTA: Contact a cross-border tax specialist early to see if you qualify for a withholding reduction.
- Find a Canadian-Friendly Agent: Don’t just use the first agent you find on a lawn sign. Use someone who understands the cross-border process.
- Set Up Your Currency Transfer: Don’t wait until the day of closing to find out your bank is going to overcharge you for the wire transfer.
The 2026 tax changes are significant, but they aren’t a reason to panic. They are simply a reason to be more strategic. With the right planning, you can navigate the 66.7% inclusion rate and the FIRPTA hurdles to ensure your US investment remains a success.
Get Expert Help Today
Navigating the complexities of cross border tax services and the US real estate market shouldn’t be a solo journey. At Canada to USA, we specialize in helping Canadians manage every aspect of their US property ownership and eventual sale.
We can provide you with referrals to specialized real estate agents who work specifically with Canadians, ensuring your home is priced right and sold efficiently. Plus, our members save thousands on the back end with our exclusive currency exchange discounts when it’s time to bring those USD profits back home.
Ready to discuss your 2026 exit strategy? Contact Canada to USA today for professional guidance and to get connected with the right experts for your specific situation. Don’t leave your hard-earned equity to chance: or to the tax man.
