Moving Canada -> US: Implications of NOT selling the hous

[sadpanda]

Hi

I'm transferring to the US office of the company I'm currently employed with. I will be getting an L1 visa and will start my employment in the US branch soon. My family is coming with me.

I own a house in Canada and am very hesitant to sell it before we're settled in the US and decided that we want and can (GC conditional) stay permanently. Could you please clarify tax implications of NOT selling our house right away when we move and renting it out for a few years?

I hope to rent it our for a few years and sell when we're ready to buy a property in the US. By that time I would have moved my tax home to the US and will be non-resident in Canada for tax purposes.

What capital gain taxes and other taxes if any are payable in Canada and in the US?Does primary residence exemption apply in both countries? What are other caveats that I need to be aware of to make the right decision?

Thank you for your advice! This seems to be a very very confusing matter to many

[nelsona]

The moment you go to live an work in US, you are Cdn non-resident, and your home loses its principal residence status. When you eventually sell you willo we tax on the gain on a proportional basis with an extra year given to you as resident.

This is the case whether or not you rent it out or leave it empty.

If you do rent it out, you must pay Cdn tax every month on the rent. It is a 216 return and NR6 that you will need to file. You will alos have to pay tax in US on the rental income, with credit given for the CDn tax.

If you sell within a year of leaving Canada, you have no gains tax to pay (because of the one year grace) If you rent out, you may havwe some CCA to recapture.. You won't have any gains tax to pay in US if you sell within 3 years (other than depreciation recapture if you rent out).