Selling US House after becoming Canadian PR

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rgburress
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Joined: Tue Aug 23, 2016 12:44 pm

Selling US House after becoming Canadian PR

Post by rgburress »

Hi, I tried to do some research on this in the forum but the responses I found were either Canadians moving to the US (the opposite of my situation) or for selling vacation properties in the US as a Canadian.

My wife and I will be moving to Canada, she is a dual US and Canadian Citizen, I am a US Citizen and application approved for Canadian PR. I have until May 5th of 2017 to go and pick up my PR. We are planning to go and pick up the PR before then but I will need to come back and continue working through July of 2017 for my employer, at that time I will become a contractor for my employer and we can go to Canada and I can work from home as a contractor.

So the questions relates to the sale of our house in the US. Basically, should we have our house sold before I actually go become a landed immigrant? Would I owe extra taxes to Canada if I want to sell the house before or after obtaining my PR? What happens if the house takes longer to sell then expected and it ends up going past when we actually move to Canada? We do not intend to rent the house at this time unless it goes a very long time without selling, but I don't think it will take long to sell. We would expect to make anywhere from 20 to 50k on selling the house over what we paid for it two years ago and it is our primary residence right now.

Thanks for any information or if any other info is required please let me know.

Thanks
nelsona
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Post by nelsona »

For simplicity let's say you don't rent it out.

Taxation in Canada will only occur on the gain in value after you move to Canada, assuming it is no longer your principal residence.
Taxation in US would only occur if you have not sold it within three years of moving to Canada. Make sure you live in it the 2 years in order to qualify as a home.
Either way, if you have not sold it when you move, be sure to get a solid market value assessment for future taxes.

As an aside, you have correctly concluded that you don't have to move to Canada to get your PR status.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
rgburress
Posts: 7
Joined: Tue Aug 23, 2016 12:44 pm

Post by rgburress »

Yeah I have no plans to rent the house, I just don't want to deal with renters unless I absolutely need to.

So the plan is that I definitely have to go and pick up my PR before May 5th because that is my deadline, I'm probably looking at going to get the PR probably around March. When I go get my PR I will need to declare everything I am bringing right? Would that also include at this time I would need to bring the current assessment of the house, or is it only when I actually move that I would need this? I was under the impression anything I don't declare when I go get my PR that I may owe taxes on if I do bring things later, vehicles and what not. Also, how old of an assessment of the house is acceptable?

So can I technically be a PR but not be a tax resident yet? If so then it would make since that I could just sell the house just before moving but a few months after getting my PR and I would not owe any extra taxes as a Canadian PR, I guess I just assumed that once I actually pick up my PR that they would be expecting me to be filing taxes in canada, not sure if that assumption is right or wrong.

I have already lived in it for just over two years so by the time we are ready it will be closer to 3 years so I am covered there.

If I become a PR of Canada and actually end up moving up there before we can sell the house would my old residence (current home in the US) qualify for the 1 year capital gain tax excemption for Canadians or is that just for previous residence in canada?
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

"Getting your PR" is not a tax event, so has no impact on your actual residence. Only when you MOVE to Canada (which could be years later) do you become a Cdn tax resident. There is no "declaration" made at the time you get your PR.

We can worry about the actual taxation of the house later. If you do not own a home in Canada, even if you live in Canada, you can designate the US house as your Permanent residence year after year. This would avoid taxation in Canada (but only if you do not own another house which you would designate as your Permanent residence) .

The "Plus 1" year does not apply in your case, unless you somehow hold on to this house for several years, and also buy a house in Canada later, not right away. in that case you would have US tax to pay anyways so not much saving there.

Like I said, worry about that later. What you need to do is either
(a) sell the house before moving (which would be before the dat you physically move to Canada, not the day you pick up your PR card), or
(b) get a fair market value appraisal at time of departure from US.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
rgburress
Posts: 7
Joined: Tue Aug 23, 2016 12:44 pm

Post by rgburress »

OK, that makes since, and is a big relief, it will be nice knowing that I can go and get my PR anytime and still keep the house as my residence.

So just a couple more questions, not as much related to the house but more to when I go pick up the PR.....will I need to declare everything I do intend to bring, either with me when I pick up the PR or at a later time, at the time of obtaining my PR? So for instance do I need to tell them I have a house in the US, or do I need to bring all the details for my vehicles and all the details for all my belongings when I first go pick up my up my PR? Or is it OK to just say I have other belongings that will be brought at a later date?

Also, just to avoid confusion do you think it is better to wait until after the new year to actually go and get my PR? I know from your precious reply that I wouldn't be a tax resident until I actually move there, but would it just make more since to wait just to avoid any possibility of an issue with any tax or other situation if I don't need to go obtain the PR until next year.

I have other questions as well, but haven't had time to research much with them yet and believe they are most likely common enough that I can find the answers with some quick searching. So I will post those at a later time if needed after some research.

Thanks for the information!!!
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

As I said, going to pick up your card has nothing to do with moving. You aren't moving that day. When you move, you will have all your stuff with you (or in a van) THAT will be the time you declare what you are importing. The CBSA website has all the required forms for this. This will all happen at a later date.

There will be no tax issue. PR status is Canada is NOT a residential tie, notr does it require filing a tax return.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
rgburress
Posts: 7
Joined: Tue Aug 23, 2016 12:44 pm

Post by rgburress »

Understood. Makes since as well.

So if I do not have my house sold before I move and end up getting the assessment and selling it a little after moving up, how much is the tax that I would pay on the capital gain? If there is any capital gain that I would have. Is it a set percentage or does it vary based on how much the capital gain is?

Thanks again for all the help, you were a great deal of help with my last post as well.
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Not going to answer that. Too many variables.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
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