← Back to Snowbird & US-Property Cross-Border Assessment
Sample report · fictional client
Owner: Cross-Border Tax Research Lead. Version 1.0 (2026-07-06). A demonstration deliverable for a FICTIONAL client, built to show the Lane 2 template in action and the citation standard every real assessment must meet. All facts about "Margaret & David" are invented; all rules are cited to primary sources. Published on the Lane 2 landing page as the sample report (trust requirement, per the GOO-6 evaluation).
Prepared: 2026-07-06 · Tax years in view: 2025 filing / 2026 sale + day-count planning
Your situation (as you described it): You are a retired couple, both Canadian citizens and tax residents of Ontario — neither of you is a US citizen or green-card holder. You own a condo in Naples, Florida, bought in 2013 for about USD 300,000, now under contract to sell for about USD 560,000, closing March 2026; the buyer will use it as their own residence. Over the years you rented it out roughly ten weeks each winter, and your property manager withheld US tax on the rent; you claimed depreciation on those rentals. You each spend about 150 days a year in Florida. You have never filed a US Form 8840. Your worldwide net worth is roughly USD 1.6 million. Your top goal: "We're selling the condo — how much US tax gets held back, do we get it back, and are we going to owe anything we didn't expect?"
Your cross-border picture at a glance:
The Substantial Presence Test. As non-US-citizens, your US tax status turns on days present. You are a US resident alien for a year if you are in the US ≥ 31 days that year and your weighted three-year total is ≥ 183, counting all of this year's days + ⅓ of last year's + ⅙ of the year before [IRC §7701(b)(3)]. At ~150 days each year:
150 (2025) + 150 ÷ 3 (2024) + 150 ÷ 6 (2023) = 150 + 50 + 25 = 225 ≥ 183 → you meet the test.
So, on the raw arithmetic, you are each treated as a US resident — which, uncured, would put you in the US worldwide-income system with FBAR and Form 8938 obligations. That is not where you want to be, and you don't have to be.
Form 8840 closes it — but only if you file. Because your current-year days (150) are under 183, you qualify for the Closer-Connection Exception: you keep a home in Ontario, your family and life are in Canada, and your tax home is Canada. Filing Form 8840 each year establishes you as US non-residents despite meeting the day count [IRC §7701(b)(3)(B); Treas. Reg. §301.7701(b)-2]. It is a short standalone statement, due June 15 [Form 8840 instructions].
The problem: you told us you have never filed Form 8840. That means for each past year you met the test, you have — on paper — been an un-cured US resident. In practice the fix is to begin filing 8840 and to have a professional assess the back years; the exposure is usually manageable for a Canadian retiree with a closer connection, but it should be reviewed, not ignored (Section 8).
Bottom line: you are US non-residents if you file Form 8840 — start doing so for 2025 and going forward, and get the prior years looked at.
United States:
Canada:
The sale — FIRPTA withholding (your #1 concern). When a non-resident sells US real estate, the buyer must withhold US tax and send it to the IRS — the FIRPTA regime [IRC §1445(a); §897]. The rate depends on price and use:
Your sale is ~USD 560,000 and the buyer will use it as a residence, so you land in the 10% tier: roughly USD 56,000 will be withheld at closing and remitted on Forms 8288/8288-A within 20 days [Treas. Reg. §1.1445-1].
**Crucially, that $56,000 is a deposit, not your final tax. You file a Form 1040-NR for 2026 to report the actual gain and either pay the difference or claim a refund [IRC §897; §6402]. Your gain is about USD 260,000 (≈ $560k sale − ~$300k cost, before selling costs and adjustments). Held since 2013, it's long-term, taxed at 0/15/20%** federal capital-gains rates [IRC §1(h)] — but see depreciation next.
Depreciation recapture (a cost you may not expect). Because you claimed depreciation during the rental weeks, the portion of your gain equal to that depreciation is "unrecaptured §1250 gain," taxed at up to 25%, not the lower capital-gains rate [IRC §1(h)(1)(E); §1250]. This is the item most sellers are surprised by. A rough picture: if, say, $40,000 of depreciation was claimed over the years, ~$40,000 of your gain is taxed at up to 25% and the remaining ~$220,000 at long-term rates — a total US tax plausibly below the $56,000 withheld, which points to a refund (or a reduced-withholding application before closing).
Reduce the withholding up front. Rather than lend the IRS the excess and wait, you (or the buyer) can file Form 8288-B to request a withholding certificate setting withholding at your expected actual tax [Treas. Reg. §1.1445-3]. This needs an ITIN and a computed estimate — an execution item for a cross-border professional (Section 8), and worth it given the dollars.
The Canadian side of the sale. Canada also taxes this gain (you're Ontario residents), computed in Canadian dollars on both the 2013 purchase and the 2026 sale — so exchange-rate movement can make your Canadian gain differ from your US gain. You claim a foreign tax credit for the US tax to avoid double taxation [Treaty Art. XIII(1); Art. XXIV]. Note the Canadian principal-residence exemption generally will not shelter a US vacation/rental condo. Coordinating the two returns (and their different years/currencies) is where a cross-border preparer earns their fee.
The rental years — an election you may have missed. US rent paid to a non-resident is, by default, taxed at a flat 30% of the gross rent with no deductions [IRC §871(a); §1441] — which is likely what your property manager withheld. But the §871(d) net-rental election lets you treat the rent as business income on a 1040-NR, deduct expenses and depreciation, and pay tax on the much smaller net — usually far less than 30% of gross [IRC §871(d); Treas. Reg. §1.871-10]. If you never made this election, you may have overpaid on the rental years and could recover some via late/amended filings — a professional should quantify this for open years.
Your property is in Florida — the good-news state for you: Florida has no state personal income tax and no state estate or inheritance tax [Fla. Const. Art. VII; FL Dept. of Revenue], so there is no Florida return on the rental income or the sale, and no Florida death-tax layer. Two Florida items to note: a documentary stamp tax applies to the deed at sale (customarily seller-paid), and as non-residents you never had Florida's homestead exemption or 3% Save-Our-Homes cap, so your property-tax base was the full assessed value. Had your condo been in an income-tax state (Arizona, California, New York, etc.), the rental income and the sale gain would each trigger a state non-resident return on top of the federal filings — which is why we always check the actual state, not just "the US."
US real estate is a US-situs asset that sits in your US estate as non-residents, and the non-resident estate-tax exemption is only USD 60,000 — far below the USD 13.99 million (2025) available to US citizens/residents, with rates to 40% [IRC §2103; §2104; §2102(b); §2001(c)]. On its face a ~$560k US condo looks exposed.
The treaty saves you here. As Canadian residents, you're entitled under Article XXIX B of the Canada–US treaty to the greater of the $60,000 credit or a pro-rated share of the full US exemption, based on the ratio of your US-situs assets to your worldwide estate, plus a possible marital credit [Treaty Art. XXIX B(2)–(4)]. Your worldwide estate (~USD 1.6M) is far below the full US exemption, so the pro-rated credit almost certainly eliminates US estate tax on the condo. And of course, once you sell in 2026, the US-situs real property is gone and this exposure largely disappears (unless you reinvest in US-situs assets — e.g., US stocks held directly, which are US-situs [IRC §2104]). This is a snapshot, not an estate plan — joint title, mortgages, and any future US holdings change the analysis, and estate planning above this snapshot is a refer-out.
The number that governs your US status is current-year days, and there are three zones:
Counting tips: every partial day in the US counts as a full day; days you're stuck in the US due to a medical condition that arose there can be excluded on Form 8843 [IRC §7701(b)(7); Treas. Reg. §301.7701(b)-3].
The Ontario health squeeze. To keep OHIP, you must be physically in Ontario ≥ 153 days in any 12-month period [Ontario Health Insurance Act; ontario.ca]. Your ~150 US days leave ample room to clear 153 Ontario days provided your other travel is modest — but it's the constraint to watch if you add a summer trip elsewhere. (This limit is province-set and changes — confirm the current OHIP rule before you rely on it.)
Your recommended pattern: keep US presence at ~150 days and firmly under 183, file Form 8840 every spring, and hold ≥ 153 days in Ontario — after you sell in 2026, your US day-count risk drops but the 8840 habit is cheap insurance while you still travel south.
What this assessment did: determined your US residency-by-day-count status and the role of Form 8840; explained the FIRPTA withholding on your sale, why it's a prepayment, and how depreciation recapture and the §871(d) election affect the real number; gave you an estate snapshot and a day-count plan. What it did not do: compute your exact US or Canadian tax, prepare or file any form, or give licensed advice.
Explicit uncertainty flags:
Referral recommendation: your situation is well within a high-level assessment, but four items — the back-year 8840 review, the §871(d) / prior-rental filings, the FIRPTA 8288-B and 1040-NR for the sale, and any estate planning — should be executed by a US-Canada dual-qualified CPA or cross-border tax lawyer. Given the ~$56,000 at stake in the sale withholding alone, that engagement pays for itself.
This is a high-level informational analysis, not advice. CrossBorderCheckup (a GoodQuestions project) is not a law, accounting, or investment-advisory firm, and this assessment is not licensed tax, legal, or investment advice. It does not create a professional–client relationship, is based solely on the information you provided, and reflects our understanding of the rules as of the date shown. Tax laws change and apply differently to individual facts. Do not act (or decline to act) solely on this document. Before making decisions or filings, consult a professional licensed in the relevant jurisdiction(s) — for cross-border US–Canada matters, a dual-qualified CPA or cross-border tax lawyer. We do not prepare or file returns on your behalf.