Capital Gains Tax

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aleng
Posts: 4
Joined: Mon Jul 13, 2020 10:26 am

Capital Gains Tax

Post by aleng » Mon Jul 13, 2020 10:29 am

I am an US citizen that will be moving to Canada for 4-5 years on a local contract (work visa). I have stocks in the US. If I sell the stocks while in Canada, will the gains be subject to Canadian or US taxes (or both)?

nelsona
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Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Capital Gains Tax

Post by nelsona » Mon Jul 13, 2020 5:24 pm

Both, with the tax you pay in canada eligible for credit in your US return (Stock gains are sourced in the country of residence when you sell). The tax in canada will be based on the gain since you arrived in Canada only, while the US tax will be the normal gains tax based on original purchase.

You would be wise to sell any losing positions before leaving US, as it is unlikley that you will be able to effectively use any losses incurred in future on your US return (and they won't count in Canada)
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

aleng
Posts: 4
Joined: Mon Jul 13, 2020 10:26 am

Re: Capital Gains Tax

Post by aleng » Mon Jul 13, 2020 7:49 pm

Thank you for the clear and understandable answer. I am happy to hear that Canada taxation only applies to gains in Canada. I have a number of long term positions and was worried if I would need to sell during my time in Canada.

nelsona
Posts: 16456
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Capital Gains Tax

Post by nelsona » Mon Jul 13, 2020 11:19 pm

Any investments you hold thoughout the period you live in canada will not be subject to departure tax when you leave canada. Other investments you have when you leave will be taxed on departure regardless of sale or not.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

aleng
Posts: 4
Joined: Mon Jul 13, 2020 10:26 am

Re: Capital Gains Tax

Post by aleng » Tue Jul 14, 2020 10:41 am

Interesting. Does that include real estate? For instance, if I keep my house in the US and it appreciates, will that be subject to departure tax?

nelsona
Posts: 16456
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Capital Gains Tax

Post by nelsona » Tue Jul 14, 2020 1:47 pm

Your US property would qualify for departure tax exemption.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

aleng
Posts: 4
Joined: Mon Jul 13, 2020 10:26 am

Re: Capital Gains Tax

Post by aleng » Tue Jul 14, 2020 2:12 pm

Perfect. Thanks again!

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