Hi there, I am preparing returning to Canada (albeit perhaps for only 4 months) this year after 6 years away on a TN visa. I have investments (stocks) I bought in the US, as well as an investment property I bought 3 years ago. When I return to Canada, is there a deemed disposition rule for the investments and real estate as there was for emigrating from Canada, where I am forced to pay capital gains on these upon departure? (I was not able to find anything upon searching IRS) Is the fact that I may only be temporarily returning have any impact, or potential benefit?
Cheers
Returning to Canada - impact on investments and real estate?
Moderator: Mark T Serbinski CA CPA
Not to worry.
First off, IRS doesn't have deemed disposition on departure, so you're not going to find anything there.
Canada does however have both deemed disposition on arrival and departure, so the worst you could do in Canada would be to owe tax on the gains made in the 4 months you are there.
But Canada also has a rule that if you arrive and leave within 5 years, you don't have to deal with any of this deemed disposition stuff on items you owned when you arrived and still owned when you left.
So you will be fine.
First off, IRS doesn't have deemed disposition on departure, so you're not going to find anything there.
Canada does however have both deemed disposition on arrival and departure, so the worst you could do in Canada would be to owe tax on the gains made in the 4 months you are there.
But Canada also has a rule that if you arrive and leave within 5 years, you don't have to deal with any of this deemed disposition stuff on items you owned when you arrived and still owned when you left.
So you will be fine.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
They don't if you are not required to file a US tax return. This is a long-standing loop-hole for Cdns who leave US (as non-US citizens and non-GC holders). they don't have to pay US tax on the accrued gains, and Canada only starts the clock on arrival. I would wait until the next calendar year after leaving before selling, just in case you decide to file a full year US retunr in your departure year.
The investment property will always be taxed in US, since it is real estate, but only when you sell. Again, canada will only tax the growth after arrival.
The investment property will always be taxed in US, since it is real estate, but only when you sell. Again, canada will only tax the growth after arrival.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
I'm in a similar situation and just want to follow-up for confirmation.
1. I worked in the states for 3 years on a (constantly renewed) TN Visa.
2. I files US taxes as a resident (aka form 1040), having no financial ties to Canada.
3. During that time I acquired company stocks for the company that I worked for.
4. The stocks have remained in an online trading account, untouched.
5. I have since returned to Canada and filed the my last 1040 and 1040NR forms.
[quote="nelsona"]IRS doesn't have deemed disposition on departure, so you're not going to find anything there. [/quote]
So there was no way of me declaring my stocks to the IRS and if my filing the 1040NR was my last financial act of of leaving, then I've departed 'properly'?
[quote="nelsona"]They don't if you are not required to file a US tax return.[/quote]
If I have already left the US as above, what would require me to file an additional ta return?
[quote="nelsona"]Canada does however have both deemed disposition on arrival and departure, so the worst you could do in Canada would be to owe tax on the gains made in the 4 months you are there. [/quote]
What would be the mechanism that I need to use for the deemed disposition on arrival back into Canada?
[quote="nelsona"]But Canada also has a rule that if you arrive and leave within 5 years, you don't have to deal with any of this deemed disposition stuff on items you owned when you arrived and still owned when you left. [/quote]
This sounds like its applicable for items owned before the departure and still owning after the return. Does this apply to me? My period in the US was 3 years but the stock were acquired during my stay in US, not before.
Do you have a link to this for further reading?
Thanks!
1. I worked in the states for 3 years on a (constantly renewed) TN Visa.
2. I files US taxes as a resident (aka form 1040), having no financial ties to Canada.
3. During that time I acquired company stocks for the company that I worked for.
4. The stocks have remained in an online trading account, untouched.
5. I have since returned to Canada and filed the my last 1040 and 1040NR forms.
[quote="nelsona"]IRS doesn't have deemed disposition on departure, so you're not going to find anything there. [/quote]
So there was no way of me declaring my stocks to the IRS and if my filing the 1040NR was my last financial act of of leaving, then I've departed 'properly'?
[quote="nelsona"]They don't if you are not required to file a US tax return.[/quote]
If I have already left the US as above, what would require me to file an additional ta return?
[quote="nelsona"]Canada does however have both deemed disposition on arrival and departure, so the worst you could do in Canada would be to owe tax on the gains made in the 4 months you are there. [/quote]
What would be the mechanism that I need to use for the deemed disposition on arrival back into Canada?
[quote="nelsona"]But Canada also has a rule that if you arrive and leave within 5 years, you don't have to deal with any of this deemed disposition stuff on items you owned when you arrived and still owned when you left. [/quote]
This sounds like its applicable for items owned before the departure and still owning after the return. Does this apply to me? My period in the US was 3 years but the stock were acquired during my stay in US, not before.
Do you have a link to this for further reading?
Thanks!
Your sticks are not considered US stocks once you reside in Canada. There is no mechanism for the deemed acquisition, you track this yourself. You are done with US taxation on these items
The other thing about erasing deemed disposition obviously doesn't apply to items youy had only after leaving Canada.
The other thing about erasing deemed disposition obviously doesn't apply to items youy had only after leaving Canada.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
Thanks for clearing that up. But by tracking it myself, that means that when I sell the stocks I report the capital loss/gains calculated not by the purchase price, but from the price the stock was at on the day I reentered Canada?
And is this scenario plausible? I sell my stocks with the current US based trading company and the company files something that requires me to file an additional US tax return.
And is this scenario plausible? I sell my stocks with the current US based trading company and the company files something that requires me to file an additional US tax return.