deemed disposition for former principal residence

[SergeP]

I am moving to US from Canada. I have a house where I have lived for the last 10 years. I do not plan to sell the house in the near future. I will use it for my returns to Canada during summer (or may rent it in the future). My new principal residence will be in US. This means I am converting my principal residence in Canada into my second home. For all future transactions with this house what should I use as a cost base for the deemed disposition? Will estimation from a real estate agent work for this purpose?

[nelsona]

There isn't any deemed diposition on CDn real esate when you leave, but you will want a solid Fair-market evaluation, for use both in the future cpa gains calculation for CRA when you sell, and for use on your US tax, should you convert to a rental.

[nelsona]

A couple of agents' evals should work.

[SergeP]

Thank you.

[SergeP]

I will move to US this year. I leave my current principal residence vacant until the next year. If I sell it in 2023, I will need to calculated a capital gain between the time I leave Canada and the time I sell the house. Should I file form T2091 for my 2022 filing to CRA to designate this home as my principal residence for the years before my move to US?

[nelsona]

You will get a "free" year when you do the cap gains calculation if you use the OVERALL gain, rather than the actual gain from departure, so you will likely avoid any Cdn tax (and US tax) if you sell within 12 months of leaving.

You only make the designation when you sell.

[SergeP]

If I do not convert this house to a rental and will sell it in a few years, what cost base should I use for the US tax, the house price at the time I become a US resident (2022) or the house price at the time I purchased it (2010)? It was my principal residence from 2014 to 2022.

[nelsona]

The FMV when you left Canada.

You get three years however to sell without incurring US tax. (assuming you have not esceeded the 250K limit during those three years.

[SergeP]

Do you mean the 250K limit (or 500K for married) in the capital gain?

[nelsona]

yes

[SergeP]

I purchased the house in 2010 when I was a US resident. I rented it for 4 years. I moved back to Canada in 2014 and converted the house from a rental to my principal (with capital gain/loss reported to CRA).
In 2022 I moved to US and became a US tax resident. I still have this house (vacant). If I sell it in 2023 do I have this "free" year for non-reporting cap gains to CRA because of a principal residence exception? Or this rule does not apply because the house was a rental between 2010 and 2014.

[nelsona]

Your reporting of gains in 2014 restarted the clock, so you still get that extra year when calculating the gain from 2014, which makes the house tax-free in Canada if you sell within the year.

I'm assuming you were not a US taxpaer once youy returned to canada, other wise you might have a US tax bill to pay when you sell, at the minimum for the recapture of depreciation from the early years.

[SergeP]

Thank you for answering. Yes, I filed a non-resident US tax return during those year in Canada.