Moving Back to Canada

MCH · Post by **MCH** » Sat Feb 24, 2007 1:10 am

Hello,
My US employer is giving me the option to move back to Canada, and work from home.
My home in Canada is currently rented, and I was depreciating the property in Canada and the US. Before renting it out, it used to be my principal resident for 10 years. The fair market value when I converted my home to rental property was $500,000. Current price for the house is $540,000.
If I sell the property upon my return to Canada, do I have to pay IRA & CRA taxes capital gain tax on $40,000 plus prior depreciation amounts? If so, how long I have to live in the house to avoid capital gain tax.

Many Thansk,

nelsona · Post by **nelsona** » Sat Mar 03, 2007 10:09 pm

If you have no Green card, you will not have any US tax to pay as long as you sell after you leave US (preferably in the taxyear after you leave). Otherwise, you will owe on the 40K plus deprecialtion.

If you do have a GC, then you will always owe back the depreciation, but if you live there between 2 and 5 years you will pay less and less of the cap gains.

For Canada, you will owe cap gains based on the time you spent out of Canada. If you own the house 10 years, and were out of Canada 2 years, 1/10th of the entire gain will be taxable (CRA gives you back a year). You may elect to pay only on the $40K +CCA if that is better.

MCH · Post by **MCH** » Sun Mar 04, 2007 7:25 pm

I got it, with a GC, no matter how long I live in my house in Canada, I will allway owe the US taxes upon selling my house.

Thanks,

nelsona · Post by **nelsona** » Mon Mar 05, 2007 12:43 am

Yes. And if you lived outside Canada for more than one year, you will always owe some tax to Canada.