Many thanks!
We will be doing as you suggest. It is my understanding, but it would be nice to confirm, that if we follow this plan we should only take a foreign tax credit for the rental income. Any taxes we pay on the "phantom" income of the cap gains and CCA recapture are not eligible for the foreign tax credit because they are not recognized by the US as taxes paid on actual foreign income (unless we take the aforementioned treaty provision to recognize the sale and adjust our US FMV, which we do not wish to do). I guess that makes sense. We would just be carrying that credit forward and are not likely use it across the next 10 years for which it is valid, it still would be good to confirm with you just in case.
Thanks again for your help
