U.S. Donations And Taxes

One of the attractive aspects of Muskoka is the close relationship that it fosters between Canadians and Americans. Canadians and Americans frequently travel and work back and forth, and often own property across the border. However, the tax systems of Canada and the United States do not work in harmony.

A U.S. resident who donates Canadian land to a qualified U.S. 501 (c)(3) land trust may obtain a U.S. tax deduction under the U.S. Internal Revenue Code. Similarly, U.S. residents with income from Canadian sources (e.g. employment, land rentals, sales, etc.) can donate Canadian land to a Canadian charity and receive a Canadian tax credit. However, this credit is usable only against Canadian income tax payable on this income.

When a U.S. resident with no Canadian income wants to donate land to a Canadian charity, the process can be complicated. Decisions about your land and affairs should be made only after careful consideration and professional consultation.

If you would like to find out more about U.S donations and their tax treatment, please contact the Muskoka Heritage Trust through the Muskoka Heritage Foundation. We can also put you in touch with advisors familiar with such arrangements.

Source: OLTA Land Trust University