Schedule D
Capital Gains and Losses
Who Must File
US taxpayers who sold or exchanged capital assets such as stocks, bonds, real estate, or other investments during the tax year, including Canadian-listed securities and Canadian real property.
Deadline
Filed with Form 1040 by April 15 (or extended deadline)
Penalty
No separate penalty for Schedule D; underreporting capital gains triggers accuracy-related penalties of 20%
Step-by-Step Filing Instructions
Gather all 1099-B forms from US brokerages and trade confirmations from Canadian brokerages.
Separate transactions into short-term (held one year or less) and long-term (held more than one year).
For Canadian securities, convert the acquisition cost and sale proceeds to USD using exchange rates on the respective dates.
Report short-term transactions in Part I and long-term transactions in Part II.
Use Form 8949 to list individual transactions before summarizing totals on Schedule D.
Calculate net short-term and long-term gains or losses.
Apply the $3,000 capital loss deduction limit and carry forward any excess losses to future years.
Tips & Best Practices
Currency gains on Canadian dollar holdings are capital gains reportable on Schedule D.
The cost basis for Canadian securities must be converted to USD on the date of acquisition, not the date of sale.
Selling a Canadian principal residence may trigger US capital gains tax even if exempt in Canada under the principal residence exemption.
Wash sale rules apply to repurchases within 30 days, including purchases in a Canadian brokerage account.
Long-term capital gains are taxed at preferential rates (0%, 15%, or 20%) depending on your income bracket.
Frequently Asked Questions
Do I owe US tax when I sell my Canadian home?
Potentially yes. The US does not have a blanket principal residence exemption like Canada. You may exclude up to $250,000 ($500,000 married filing jointly) under IRC Section 121 if you meet the ownership and use tests, but any gain above that is taxable.
How do I handle foreign currency gains?
Gains or losses from converting Canadian dollars to US dollars are treated as capital gains or losses. If you hold Canadian dollars and the exchange rate moves before you convert, the difference is reportable on Schedule D.
Can I offset US capital gains with Canadian capital losses?
Yes. Capital losses from any source, including Canadian investments, can offset capital gains on your US return. Net capital losses in excess of gains can offset up to $3,000 of ordinary income per year, with the remainder carried forward.
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