My wife is Canadian and is a non-resident alien. I am a US citizen, and primary residence in US. For years, I have filed "married filing jointly", treating my Canadian wife as a resident alien for tax purposes. She is likely going to inherit her parent's house (in Canada) for which she is living in it as a primary residence, and maybe selling it soon after. In Canada, if it is your primary residence, it is completely tax exempt. The gains on it is substantial as they owned the house for > 30 yrs.
1) When I file US taxes, do I have to include the sale of this house that is in Canada, and do I have to pay US taxes on this?
2) Is it possible for one year to file as "married filing separately", then go back to "married filing jointly" the next year?
