Capital Gains moving from USA to Canada

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spinout1
Posts: 2
Joined: Sat Jan 09, 2010 12:28 pm

Capital Gains moving from USA to Canada

Post by spinout1 »

Hi,

Is there a way to avoid paying capital gains when moving from USA to Canada?

My understanding is that the US taxes residents when they live in the US. So if one moves to Canada before the end of the fiscal year and then sell stocks to realize a capital gain - the US will not require to pay taxes. On the other hand moving to Canada is a transition year and therefore Canada does not tax assets which have been earned while being a non- Canadian resident...

Is this true?

Thanks.
nelsona
Posts: 18678
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

If you are a non-citizen and non-GC holder, you certainly can avoid US cap gains taxes, by waiting to sell your "winners" until after you are no longer taxable in US.

That *could* be soon after you leave, if you decide to make your departure date from US the same as your arrival date in Canada. However this would mean filing a "part-year" US return, which could be higher taxation that filing full year, which means making your final US tax return report all world income for entire year, including any cap gains made while in canada. This would make it better to wait until the next year to sell.

By the way, as you shoud know, when you arrive in Canada, your investments are all "rebought" on that day as well for canadaian tax purposes, so you would not own much cdn tax on any post-arrival sale.

I've advocated this strategy for years.

3 points: make sure you sell any losers BEFORE you leave; and this strategy does not work for US citizens and GC holders, as they remain taxable even after departure. They would still be advised to sell losers before leaving however. Also, it does not apply to real estate and resource investments, which also remain taxable in US after departure.
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
spinout1
Posts: 2
Joined: Sat Jan 09, 2010 12:28 pm

Post by spinout1 »

Nelsona, Thank you very much for your prompt response - this is exactly the info I was looking for.

Cheers,
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