Stocks & Primary Residence Sale in Green Card Emigration Year

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genghee
Posts: 2
Joined: Tue Nov 30, 2021 1:08 pm

Stocks & Primary Residence Sale in Green Card Emigration Year

Post by genghee »

Hi there,

My parents will land in the US and activate their green cards on 4/1. Their primary concern is minimizing taxes on the sales of their stock portfolio and primary residence. My understanding is that they would become US tax residents on that day, and deemed non-residents in Canada on the same day.

Would appreciate feedback on my proposed plan, which is to:
(1) Sell their portfolio before 4/1, as this would have no tax impact in the US, and would be taxed as resident income in Canada without any non-resident surtax. Is this assumption correct?
(2) Sell their primary residence before 4/1 if possible, as this would have no tax impact in either US or Canada. Selling their home later in 2022 would also be ok, as it would still have no tax impact in Canada but require more paperwork to avoid withholding, and no/minimal tax impact in the US.

Also, my parents want to return to Canada after landing, to stay in Canada 183 days next year to qualify as full year residents for tax-filing. I don't think this makes sense because
(a) There is no significant tax benefit in doing so if we already liquidate as resident income before 4/1
(b) They would still be deemed non-resident for time after 4/1 even if they log 183 days for the year

Is my reasoning sound or am I missing something?

Thanks!
Allen
nelsona
Posts: 18311
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Stocks & Primary Residence Sale in Green Card Emigration Year

Post by nelsona »

Any investments they hold the day theu move will be deemed sold by canada (and US) that day. So whether they sell before or not will have little impact taxwise.

Their primary residence will not be taxed in Canada for a year after they move, and will only be taxed in US if it grows by $250K after they move if they sell within three years.

And, as you state, their spending time in Canada will not make them resident of Canada, so that is not even a strategy.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
genghee
Posts: 2
Joined: Tue Nov 30, 2021 1:08 pm

Re: Stocks & Primary Residence Sale in Green Card Emigration Year

Post by genghee »

Thank you!
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