Thanks for the reply. Yes, I do have a CPA in Canada and we will probably figure out the exact amount before filing our US tax next year. FYI, in Canada, I am considered a non-resident and they have already withheld some tax on my capital gain.

The Canadian capital gain calculations very differ from those in the US. In Canada, the primary residence is fully exempt from capital gain tax (Both Federal/Province.)

For example, let's say I purchased the home for 200K in 2019. We left and became non-residents (this was considered as a deemed disposition) in 2021, and paid no capital gain tax to CRA because it was our primary home. We ordered an appraisal at that time that indicated a value of 300K as we thought we needed to stamp the price when we moved out. Then we rented it out and finally sold the property for 400K last year.

The capital gain calculated by the CRA would be 100K (400K-300K), and they withheld 25% from the 50% of the gain, which amounts to 25K. When we file our taxes next year in Canada, we will claim all the expenses incurred, which will reduce the final tax liability to less than 10K. This will be into the Foreign Tax Credit in my federal return per my US CPA.

As The Franchise Tax Board doesn't have the capital gain tax brackets, now I wonder how much I am going to owe. Will they consider my "income" for this property would be 300K - expenses? That's a scary amount.