Tax questions regarding residency and selling a house

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ruib77
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Joined: Sat Jul 14, 2012 10:17 pm

Tax questions regarding residency and selling a house

Post by ruib77 »

I'm a Canadian citizen and currently living in Ontario. I am going to move to US with a TN for the first time in a few months. I have a few questions.

1. I have a principal residence home in Canada. Either I can sell it before moving, or I can keep it for another year or so. What will be the tax consequences in US and Canada for both these scenarios considering capital gain etc?

2. Can I keep my house here in Canada and still be a non-resident? What about other ties like keeping Canadian bank accounts, credit cards etc?

3. If I don't want to become a non-resident in Canada, how does the taxation work? I think I will have to pay taxes in both Canada and US. But will I end up paying more after exemptions and tax credits? If yes, then how much more?

4. Can I keep both of my Ontario and the US driver's license after moving there?

Thanks in advance.
nelsona
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Post by nelsona »

1. You will not have any Cdn or US incoem tax if you sell your former principal rewsidence within a year of leaving (assuming you do not rent it out)
2. Yes you can be deemed non-resident by living and working in US, but you would need to at least get a full-fledged home in US and build uop many ties there. You do not have to get rid of any Cdn ties, simply make MORE in US.
3. You will pay the extra tax in canada (too hard to say how much more).
4. You shoulh have only the US one. Your Ontatrio one is of no use once you live in US,.
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
ruib77
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Joined: Sat Jul 14, 2012 10:17 pm

Post by ruib77 »

Thank you for your reply. I still have a few more things to clarify.

1. Is there any employment insurance benefit or anything like that for a TN worker if in case I lose my job in US?

2. In Canada, we are taxed on our individual income. But I heard in US, the tax is based on the total family income. Does it mean that we will end up paying more tax in US than in Canada given that me and my spouse will both be working with a good salary structure?

3. I am planning to move to the US in September leaving my spouse in Canada. In order to minimize the risk and hassle, I don't want to claim non residency just yet so that I can fall back to Canada easily if I don't like my new job/ place in US. But if everything goes well in there, I plan to sell my house in canada and my spouse will be moving with me in December. I will file non residency in December and put that as my departure date. Does this make sense?

4. In that case, I assume I will have to include all US income from September to December in my canada's 2012 tax return as foreign income. Correct?

5. Do I have to file a US tax return for 2012 as well?

6. After becoming a nonresident in January, I will have to file US tax returns ONLY starting from 2013. Right?
nelsona
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Post by nelsona »

1. Yes. you would get state UI upon returning to Canada
2. Filing jointly has preferencial taxrates. Will your spouse also be working on TN in US? Otherwise is she staying in canada? This may affect residency.
3-4. Yes. But you will then have to report your US income in canada until then.
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
ruib77
Posts: 42
Joined: Sat Jul 14, 2012 10:17 pm

Post by ruib77 »

So.... if I lose the job and then apply for B1/B2 by mail from US and stay in US for 6 months, will I get UI during that time? Or, do I really need to come back to Canada to claim UI?
nelsona
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Post by nelsona »

No. You cannot collect UI in any state on B1/B2 or any other status. You must return to Canada to collect.
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
nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
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Post by nelsona »

You would try to get B2 tourist status if you lost job. B1 is for business visitor
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
ruib77
Posts: 42
Joined: Sat Jul 14, 2012 10:17 pm

Post by ruib77 »

Thank you so much for clearing that up.

Although it's not directly a tax question, your knowledge and experience will guide me. Will it be too risky to buy a house right after we move to the US with a TN visa?

Should I buy the house with 100% downpayment if I can afford it? Or, will it be less risky in any way to go with a lending institution and not use all my cash as a downpayment?
nelsona
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Post by nelsona »

On the one hand you are asking about UI and on the other paying 100% of a house?

I would see if you enjoy your job/location and if your wife can find work before funding a real estate broker's college fund.
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
ruib77
Posts: 42
Joined: Sat Jul 14, 2012 10:17 pm

Post by ruib77 »

Thank you Nelsona for clarifying so many things for me.
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