I'm planning to move to US with a TN in April with my family. I checked the forum but didn't find any clear answers on these matters. Here are my issues.
1. I have a paid off house in canada that will be sold for about 500k. Now the low rate of canadian dollar makes me lose about 100k CAD if I sell the house and convert the CAD to USD. On the other hand, if I don't sell my house within a year, I will have to pay capital gain on my profit. I would like to avoid the capital gain at any cost! I want to get maximum out of the sale price of my house. Any advice or suggestions?
2. After selling the house, can I keep the $500k CAD in a savings account in Canada? If so, then how long can I keep this money in canada? Do I have to report it somewhere (CRA or IRS)? Any consequences?
3. can I transfer this money as canadian dollar to USA and keep it in a savings account there until the canadian dollar rate gets better?
4. I also have 70K RRSP and 40K RPP in canada. How long can I keep it in Canada? Should I report it to CRA or IRS? Any advice?
Money in Canada: what to do?
Moderator: Mark T Serbinski CA CPA
Lots of misconceptions....
First off, you are not "losing" any money whan you convert C$ to US$. You are buying a currency whose unit value is higher than Cdn dollar, so the number of dollars is smaller, but the VALUE is the same. the only losses you sustain on currency exchange are the fees, so make sure you minimize these by finding a good foreign exchange firm.
Now to your questions.
1. You will NEVER be subjest to Cdn taxes on the gains assocaited with your house while it was your prinipal residence. By selling in the first year, you avoid cdn tax on the gains AFTER you move, thayt is, you pay no cap gains at all. If you sell after the first year, you would stoill only pay on a small portion of the gains from after you moved. So your worry about paying tax on all the profits in your home are unjustified. US will never tax you on the gains made on your house in canada before you arrived in US, by treaty.
2. You can. But why would you? There are no "consequences" to doing this, other than tying up money that you could better use in US for housing retirement planning, investing. When you live in US you report your INCOME to IRS from anywhere in the world, and you also report the EXISTENCE of all foreign accounts and investments (much like CRA requires now), but that is all.
3. No. There are no C$ accounts in US that I know of. If you want to keep it in the CDn economy, then bring it to US and but Cdn firms that are listed in the US stock market.
4. there are other threads on what to do with RRSP. The impotant thing is (a) to find a Cdn broker that will deal with you when in US (the banks and individual MF companies won't; you will need a broker, like TD waterhouse)
and (b) do NOT collapse yoyr RRSP before moving to US.
You will want to swap your winning investments around to raise the BOOK value of your RRSP, which is different from your FMV. As I said, we have other threads that look at this.
The RRP you have to leave intact canada until retirement age, or until the firm offers you a LIRA. As with banks account, you need to report existence to IRS of these funds, but they are not taxable until you withdraw them.
First off, you are not "losing" any money whan you convert C$ to US$. You are buying a currency whose unit value is higher than Cdn dollar, so the number of dollars is smaller, but the VALUE is the same. the only losses you sustain on currency exchange are the fees, so make sure you minimize these by finding a good foreign exchange firm.
Now to your questions.
1. You will NEVER be subjest to Cdn taxes on the gains assocaited with your house while it was your prinipal residence. By selling in the first year, you avoid cdn tax on the gains AFTER you move, thayt is, you pay no cap gains at all. If you sell after the first year, you would stoill only pay on a small portion of the gains from after you moved. So your worry about paying tax on all the profits in your home are unjustified. US will never tax you on the gains made on your house in canada before you arrived in US, by treaty.
2. You can. But why would you? There are no "consequences" to doing this, other than tying up money that you could better use in US for housing retirement planning, investing. When you live in US you report your INCOME to IRS from anywhere in the world, and you also report the EXISTENCE of all foreign accounts and investments (much like CRA requires now), but that is all.
3. No. There are no C$ accounts in US that I know of. If you want to keep it in the CDn economy, then bring it to US and but Cdn firms that are listed in the US stock market.
4. there are other threads on what to do with RRSP. The impotant thing is (a) to find a Cdn broker that will deal with you when in US (the banks and individual MF companies won't; you will need a broker, like TD waterhouse)
and (b) do NOT collapse yoyr RRSP before moving to US.
You will want to swap your winning investments around to raise the BOOK value of your RRSP, which is different from your FMV. As I said, we have other threads that look at this.
The RRP you have to leave intact canada until retirement age, or until the firm offers you a LIRA. As with banks account, you need to report existence to IRS of these funds, but they are not taxable until you withdraw them.
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 clearing up a lot of my misconceptions. Unfortunately, I almost have no knowledge regarding these matters. So a little further clarification will be extremely helpful!
Are you saying US will never (say 5 to 10 years from now) claim any taxes on the profit of my current house in Canada given that the house was purchased before my move to US?
There is no tax on cap gain of my principal residence in canada if it's sold in a year of my move. What happens in the 2nd year? How do I calculate the amount of tax i have to pay to the canadian govt if I sell the house in 2 years of my move? And what about if I sell the house in 3 years of my move? Does the tax on cap gain increases every year after I move?
What is the tax consequences if i rent my house when i move and sell it in year 2 or 3?
Are you saying US will never (say 5 to 10 years from now) claim any taxes on the profit of my current house in Canada given that the house was purchased before my move to US?
There is no tax on cap gain of my principal residence in canada if it's sold in a year of my move. What happens in the 2nd year? How do I calculate the amount of tax i have to pay to the canadian govt if I sell the house in 2 years of my move? And what about if I sell the house in 3 years of my move? Does the tax on cap gain increases every year after I move?
What is the tax consequences if i rent my house when i move and sell it in year 2 or 3?
The US will never claim any tax on the gains made PRIOR TO MOVING TO US.
Fpr Canada there is a calculation to come up with the gain.
Fpr Canada there is a calculation to come up with the gain.
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
If you rent, you will be liable for the gains from the time you begin to rent, as well as deprivation, which you must take 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
Two questions:
- Who and how the gain is calculated after I move or rent out?
- I guess I become non resident as soon as I receive the TN at entry. If my family get the TN dependent after 8 months of my move and move, will the one year period will start from then? Or it starts with my first move?
Thanks.
- Who and how the gain is calculated after I move or rent out?
- I guess I become non resident as soon as I receive the TN at entry. If my family get the TN dependent after 8 months of my move and move, will the one year period will start from then? Or it starts with my first move?
Thanks.
Youi said you were moving in April "with your family". Which is it?
I woul;dn't worry about figuring the tax right now. What you might want to do, if you do not sell before your move, is to get a solid appraisal doe, as this may help in determining future taxation.
I've gone thru detailed cap agins calculations elsewhere, so I wil NOT repaet here, but for CRA essentially, you will use get to reduce the non-principal residence peortion by one year. So if it was your home 10 years, and you sell it before 1 year, no taxable gain. after 2 years, 1/12 of gain is taxable, the 2/13, 3/14, etc.
I woul;dn't worry about figuring the tax right now. What you might want to do, if you do not sell before your move, is to get a solid appraisal doe, as this may help in determining future taxation.
I've gone thru detailed cap agins calculations elsewhere, so I wil NOT repaet here, but for CRA essentially, you will use get to reduce the non-principal residence peortion by one year. So if it was your home 10 years, and you sell it before 1 year, no taxable gain. after 2 years, 1/12 of gain is taxable, the 2/13, 3/14, etc.
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
Yes, but that wioll cost you the income tax on your US job.
You are putting way too much importance on the minute tax you might pay on your hose sometime in the future.
The costs associated with leaving your family in canada will be 20 times more than that.
You are putting way too much importance on the minute tax you might pay on your hose sometime in the future.
The costs associated with leaving your family in canada will be 20 times more than that.
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. Few more questions:
- If I rent out the house few months after leaving and then return to Canada after 5 years and make the house my primary resident again, then I have to pay capital gain for those rented 4-5 years period. Correct?
- I Can just leave the RESP with my current bank and pay the tax on any gain to the US.
Correct?
Off topic:
- Any one knows, if TN dependent can get Drivers License in New york or New Jersey?
- If I rent out the house few months after leaving and then return to Canada after 5 years and make the house my primary resident again, then I have to pay capital gain for those rented 4-5 years period. Correct?
- I Can just leave the RESP with my current bank and pay the tax on any gain to the US.
Correct?
Off topic:
- Any one knows, if TN dependent can get Drivers License in New york or New Jersey?
driver's license for TN visa holder
I moved to the U.S. on a TN visa 20 years ago and was able to get a NY driver's license. I subsequently moved to NJ two years later and had to take a written test for the NJ license, but had no other issues at the time. The rules have changed since, partly because of 9/11. I just renewed my license, and NJ now requires more information to get a license, including proof that you are in the country legally.
"The date on which a Canadian resident leaving Canada becomes a non-resident for tax purposes is generally the latest of the dates on which
he or she leaves Canada,Â
his or her spouse and/or dependents leave Canada (if applicable), orÂ
he or she becomes a resident of the country to which he is immigrating"
Question:
If my family receives TND in April but they continue to leave in Canada for a year, will we be considered residents or non residents during this period?
he or she leaves Canada,Â
his or her spouse and/or dependents leave Canada (if applicable), orÂ
he or she becomes a resident of the country to which he is immigrating"
Question:
If my family receives TND in April but they continue to leave in Canada for a year, will we be considered residents or non residents during this period?
That is CRA regulation. The treaty, which overrules, has a slightly different definition.
YOU would be considered non-resident in april if you stay in US and have your family visit you. You would be considered Cdn resident, if instead you regularly visit them in canada.
Your spouse would be considered Cdn resident until she moves to join you.
There really is no advantage for you to remain Cdn tax resident beyond april. It will cost you much more in taxes because you will need to include your US wages on your Cdn return. You are worrying far too much about very small tax on your home years from now.
YOU would be considered non-resident in april if you stay in US and have your family visit you. You would be considered Cdn resident, if instead you regularly visit them in canada.
Your spouse would be considered Cdn resident until she moves to join you.
There really is no advantage for you to remain Cdn tax resident beyond april. It will cost you much more in taxes because you will need to include your US wages on your Cdn return. You are worrying far too much about very small tax on your home years from now.
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
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michaelthef
- Posts: 31
- Joined: Mon Jun 17, 2013 10:39 pm
With the respect to the OP's question on moving Cdn dollars into the US, would recommend taking a look at opening an account with Interactive Brokers. You can then wire in funds from Canada into the IB account and keep in Cdn and convert into US or any other currency at will with very very low FX fees.
About to post a separate question on this to the forum (associated with reporting any gains/losses on this type of transaction).
Curious to hear if anyone else has used IB when moving to the US from Canada to bring in Cdn dollars.
About to post a separate question on this to the forum (associated with reporting any gains/losses on this type of transaction).
Curious to hear if anyone else has used IB when moving to the US from Canada to bring in Cdn dollars.