I will be moving to the US end of this month, sometime between 20-25th of Oct. I have about 18k on my HBP. I understand that HBP amount becomes the income the year I leave Canada, unless I pay if off that year. I don't have enough cash to pay that off. Is it true that that has to be paid within the 60 days I become non-resident of Canada? So that would mean that if I leave Canada on Nov 6, then 18k would be counted towards the income of the year 2010 - the year I would be resident of US for tax purposes and I would be taxed only on 18k for 2010 in Canada. Based on this information, does it make sense that I move to states 10-15 days later? I have to negotiate with that my employer in the US.
What do you suggest?
outstanding loan in the Home Buyers Plan.
Moderator: Mark T Serbinski CA CPA
The income that you add to your Cdn return for non-payment of HBP when you leave canada is NEVER considered income in US, so that is not a concern.
However, it will be considered income on the deparure return, ie in the year that you leave, and on the day that you leave. You have 60 days to pay, but the income would be added to your 2009 return.
If this were january, I'd advice you not to bother paying it, adding it to your 2010 return would not cost you much. But now, it would be added to your year's salalry so will be quite a hit.
However, it will be considered income on the deparure return, ie in the year that you leave, and on the day that you leave. You have 60 days to pay, but the income would be added to your 2009 return.
If this were january, I'd advice you not to bother paying it, adding it to your 2010 return would not cost you much. But now, it would be added to your year's salalry so will be quite a hit.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Her unpaid HBP will also be reported on her departure return. If it raises her income beyond the threshold for spousal deduction, you will not get it.
I would really encourgae you to try to delay move to US until after jan. 01, if possible. But that absolutely means either you or your spouse STAYING in Canada until January. Do not get the idea of moving in OCtober but 'declaring' the yyou left in January. Your departure is a matter of fact, not choice..
I would really encourgae you to try to delay move to US until after jan. 01, if possible. But that absolutely means either you or your spouse STAYING in Canada until January. Do not get the idea of moving in OCtober but 'declaring' the yyou left in January. Your departure is a matter of fact, not choice..
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks for the suggestion Nelsona. However, all of us are leaving together by the end of the month.
But we have a house which maintains our residency in Canada. If we don't rent it out until January 1st, will that suffice? I will lose two months income but that maybe worth it. Both my wife and I have $18k each in our HBP.
So, would having a house without renting be a viable solution?
Ed
But we have a house which maintains our residency in Canada. If we don't rent it out until January 1st, will that suffice? I will lose two months income but that maybe worth it. Both my wife and I have $18k each in our HBP.
So, would having a house without renting be a viable solution?
Ed
You *could* argue that until you are housed in your own home you have not yet met the treaty definition of "abode".
See, in 99% of cases, once WANTS to be non-resident when movingto US, as it makes taxes less (generally) and certainly simlpler. And treaty does make it easy.
I'm genrally not a fan of keeping Cdn tax residency going past your move date. it sets a bad precedence, as there really is no other date that you can point yto as your departure date, and leves open the door for abuse of OHIP, EI, GST rebate, CCTB, etc which should only be for Cdn residents.
But if you were to stay in temp housing for the rest of the year (leases usually start on the 1st of themonth after all) you could make your move date 01/01/10, reporting your US wages up til then on your Cdn return.
Note the none of this would change how you choose to file your US return.
See, in 99% of cases, once WANTS to be non-resident when movingto US, as it makes taxes less (generally) and certainly simlpler. And treaty does make it easy.
I'm genrally not a fan of keeping Cdn tax residency going past your move date. it sets a bad precedence, as there really is no other date that you can point yto as your departure date, and leves open the door for abuse of OHIP, EI, GST rebate, CCTB, etc which should only be for Cdn residents.
But if you were to stay in temp housing for the rest of the year (leases usually start on the 1st of themonth after all) you could make your move date 01/01/10, reporting your US wages up til then on your Cdn return.
Note the none of this would change how you choose to file your US return.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
The point of this being you would only have the HBP repayemnt asd income in 2010. It would be taxed at flat ~23% (you would get no personal amount on your 2010 return), if that helps you figure out if its worth doing.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Hi Nelsona,
Thanks for all the information that you have provided so far. I moved to the US in Nov and have arranged to stay in temp housing until Dec 31, 2009 (as you suggested). I will move to "permanent" housing (rent on my own) from Jan 1st, 2010. I have not yet "surrendered" my OHIP or informed CRA about my move. I have applied for SSN - upon getting which I will transfer my Ontario drivers license to the Texas license.
So the questions are the following:
1. When should I inform CRA about my move and what should be my move date? Should it be Nov 3 or 1/1/10. I still have a house in Toronto which I have not sold yet - planning to sell in the month of march. That would establish my residential ties to Canada.
2. You mentioned that even if I have a move date of 1/1/10 - I will have no deductions for that year so I will have to pay around 23% on my HBP payment. In this regard actually I need some suggestions - I have have 65k income from Canada and will have around 20k from the US. My wife did not work at all the year 2009 but she will claim all her HBP during this year. Does it mean that I can not claim the child care (day care) amount (since she will have have to claim as she has less income?). I will also have 18k HBP which I can either use on 2009 or 2010, depending on my move date.
3. I am getting $100 for my child under Universal child care - I should not be getting that after I move - that depends on me providing the information to CRA. But I have been already given the amount for the month of Nov and Dec. Is there a penalty that I would have to pay - if CRA determines that I actually moved on Nov 3rd or should I keep on getting that amount until the time I sell my house?
4. I also have some non-registered investments in Canada on which I have incurred a HUGE capital loss. It's still there. But I wanted to use that capital loss in the future capital gain. Now that I have moved to the US. How can I do that? If I move my funds to the US trading house, won't IRS consider the actual move amount to be the book value rather than the original amount? How does this work? Or will I not be able to use the capital loss at all.
Can you please suggest me something on this?
Thanks.
Ed
Thanks for all the information that you have provided so far. I moved to the US in Nov and have arranged to stay in temp housing until Dec 31, 2009 (as you suggested). I will move to "permanent" housing (rent on my own) from Jan 1st, 2010. I have not yet "surrendered" my OHIP or informed CRA about my move. I have applied for SSN - upon getting which I will transfer my Ontario drivers license to the Texas license.
So the questions are the following:
1. When should I inform CRA about my move and what should be my move date? Should it be Nov 3 or 1/1/10. I still have a house in Toronto which I have not sold yet - planning to sell in the month of march. That would establish my residential ties to Canada.
2. You mentioned that even if I have a move date of 1/1/10 - I will have no deductions for that year so I will have to pay around 23% on my HBP payment. In this regard actually I need some suggestions - I have have 65k income from Canada and will have around 20k from the US. My wife did not work at all the year 2009 but she will claim all her HBP during this year. Does it mean that I can not claim the child care (day care) amount (since she will have have to claim as she has less income?). I will also have 18k HBP which I can either use on 2009 or 2010, depending on my move date.
3. I am getting $100 for my child under Universal child care - I should not be getting that after I move - that depends on me providing the information to CRA. But I have been already given the amount for the month of Nov and Dec. Is there a penalty that I would have to pay - if CRA determines that I actually moved on Nov 3rd or should I keep on getting that amount until the time I sell my house?
4. I also have some non-registered investments in Canada on which I have incurred a HUGE capital loss. It's still there. But I wanted to use that capital loss in the future capital gain. Now that I have moved to the US. How can I do that? If I move my funds to the US trading house, won't IRS consider the actual move amount to be the book value rather than the original amount? How does this work? Or will I not be able to use the capital loss at all.
Can you please suggest me something on this?
Thanks.
Ed
1. You don't "inform"CRA of your departure, except on your tax return, or in the event you sell Cdn property, just before you sell, as special forms are required. You inform those paying you in canada that you are no longer resident, so that they can withhold you correctly, or, in the case of GST and/or CCTB,, stop paying you.
You can choose 01/01/10 as your date, based on your information.Your house is not a sufficent tie anymore, you left in November, except for the fact you haven;t moved into a permanent abode yet (that's the whole point of this exercise. Once you do, you are US resident, even if you keep the house in canada forever, If that is the case then your 2009 tax return looks like anyone elses from Ontario, and includes your US wages. Unless you sell your hose sometime in 2010, the earliest you would need to tell CRA of your departure, would be april 2011.
2. Including her HBP on her 2009 income will affect all the deductions and credit that either of you would have gotten on your 2009 return. If your wife does not work in 2010, she will get full Cdn deductions. so you might want to reconsider claiming all the hbp this year (there might be some breakpoint amount that she could report on 2009 without harming other amounts, I'll let you crunch the numbers). You would of course need to incluse an ammount that you did not pay in 2009, unless you make the required yearly payback. hbp has no effect on US income.
3. If your move date is 01/01/10 simply Inform them on that date, and return any money that you get for january and beyond. As I said in (1), your house has no bearing on this.
4. Since you have read the Emigrants guide from CRA, you are no doubt aware that you are liable for deemed disposition on the date you leave canada, this locks in any gains and losses for Cdn tax purposes, and these can be carried forward on your Cdn account forever.
For US purposes, the deemed disposition has no effect, if you don't want it to. And transferring investements between brokerages NEVER triggers a dsposition. Selling does. So, when you sell, when living in US, you will have capital losses based on the regular cost basis rules you are going to use on your Cdn departure return. For any investements that have gained while in canada, you can inform IRS that you are using the deemed dispo price as your new basis when you sell.
You can choose 01/01/10 as your date, based on your information.Your house is not a sufficent tie anymore, you left in November, except for the fact you haven;t moved into a permanent abode yet (that's the whole point of this exercise. Once you do, you are US resident, even if you keep the house in canada forever, If that is the case then your 2009 tax return looks like anyone elses from Ontario, and includes your US wages. Unless you sell your hose sometime in 2010, the earliest you would need to tell CRA of your departure, would be april 2011.
2. Including her HBP on her 2009 income will affect all the deductions and credit that either of you would have gotten on your 2009 return. If your wife does not work in 2010, she will get full Cdn deductions. so you might want to reconsider claiming all the hbp this year (there might be some breakpoint amount that she could report on 2009 without harming other amounts, I'll let you crunch the numbers). You would of course need to incluse an ammount that you did not pay in 2009, unless you make the required yearly payback. hbp has no effect on US income.
3. If your move date is 01/01/10 simply Inform them on that date, and return any money that you get for january and beyond. As I said in (1), your house has no bearing on this.
4. Since you have read the Emigrants guide from CRA, you are no doubt aware that you are liable for deemed disposition on the date you leave canada, this locks in any gains and losses for Cdn tax purposes, and these can be carried forward on your Cdn account forever.
For US purposes, the deemed disposition has no effect, if you don't want it to. And transferring investements between brokerages NEVER triggers a dsposition. Selling does. So, when you sell, when living in US, you will have capital losses based on the regular cost basis rules you are going to use on your Cdn departure return. For any investements that have gained while in canada, you can inform IRS that you are using the deemed dispo price as your new basis when you sell.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks Nelsona,
for the 2009 tax year, I will file a regular T1 and 1040 in the US. My wife will not pay back everything in the tax year 2009. For 2010 tax year, we will have T1 as a departture year and my wife will have the remaining HBP as income for that year ( and since she will not be working in the US of in 2010), she can claim the appropriate deductions in Canada. I will either claim remaining HBP as income in 2010 OR just pay myself back to avoid those 2k on taxes. On that thing, I have few questions -
1. if I sell our house on March 15 (for eg.), will I get 60 days from the March 15th or Jan 1st (the day I became non resident)?
I guess that would be 60 days from jan 1, isn't it?
for the 2009 tax year, I will file a regular T1 and 1040 in the US. My wife will not pay back everything in the tax year 2009. For 2010 tax year, we will have T1 as a departture year and my wife will have the remaining HBP as income for that year ( and since she will not be working in the US of in 2010), she can claim the appropriate deductions in Canada. I will either claim remaining HBP as income in 2010 OR just pay myself back to avoid those 2k on taxes. On that thing, I have few questions -
1. if I sell our house on March 15 (for eg.), will I get 60 days from the March 15th or Jan 1st (the day I became non resident)?
I guess that would be 60 days from jan 1, isn't it?
You would get 60 days from jan 01.
I would think about not paying back the HBP, since 23% tax is not that bad. Paying back teh HBP just means that sometime, you will be taking that money out of your RRSP, likely at the same tax rate. People in US have a tendancy to want to get rid of their RRSP sooner rather than later. You might just consider the non-payment of HBp as your first withdrawal.
I would think about not paying back the HBP, since 23% tax is not that bad. Paying back teh HBP just means that sometime, you will be taking that money out of your RRSP, likely at the same tax rate. People in US have a tendancy to want to get rid of their RRSP sooner rather than later. You might just consider the non-payment of HBp as your first withdrawal.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks Nelsona.
I am also planning to buy a house in Texas and a condo in Toronto from the sale of my house in Toronto. With regards to that, I was thinking of establishing a company to take care of the rental property in Toronto. Now as a non-resident canadian, can I do that? In other words, can I open a company as a non resident, open and register in Canada? Or would it be better for me to open a company in the US to take care of my canadian real estate? What are the accounting and tax benefits and ease of either one?
Also, my company is applying a green card (already started) - and I dont' know how it would affect later when I obtain green card later.
Ed
I am also planning to buy a house in Texas and a condo in Toronto from the sale of my house in Toronto. With regards to that, I was thinking of establishing a company to take care of the rental property in Toronto. Now as a non-resident canadian, can I do that? In other words, can I open a company as a non resident, open and register in Canada? Or would it be better for me to open a company in the US to take care of my canadian real estate? What are the accounting and tax benefits and ease of either one?
Also, my company is applying a green card (already started) - and I dont' know how it would affect later when I obtain green card later.
Ed