Tax planning while leaving Canada: investments, and house

This is our main tax information forum which deals with topics concerning Canadians living and working in the U.S., U.S. citizens contemplating working in Canada, and all aspects of Canadian and U.S. income tax and related adminstrative issues.

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wpower6
Posts: 4
Joined: Sun Jul 12, 2020 6:34 pm

Tax planning while leaving Canada: investments, and house

Post by wpower6 » Sun Jul 26, 2020 10:44 pm

Hi everybody, when I leave Canada, should I sell all my stocks and funds in my TFSA and close the account asap? Is there a certain deadline that I should complete these actions (say before the first year of return, or 2nd year of return?). Sadly I do have several stocks that have unrealized losses, does it make any difference on my actions and timing?

I have a rental property in Canada. I read that you need to withhold tax when collecting rent, but didn't find more specifically when and how to do that. Should I estimate the US plus Canada tax on Canadian rental, and ask my tenants to pay me less every month? Or should I just report the income in the next year's return and pay tax accordingly then?

Thanks!

nelsona
Posts: 16514
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Tax planning while leaving Canada: investments, and house

Post by nelsona » Mon Jul 27, 2020 10:09 am

Since TFSa is treated as an an ordinary account in US, you might want to sell your winners, and keep your losers.

As to whether you should collapse the TFSA, that is a matter of debate, based on whether TFSA is viewed as a foreign trust or not.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

wpower6
Posts: 4
Joined: Sun Jul 12, 2020 6:34 pm

Re: Tax planning while leaving Canada: investments, and house

Post by wpower6 » Mon Jul 27, 2020 11:31 am

Thank you for the quick response Nelsona. And great to see you here in addition to the TN forum in which you also provided a lot of help to people! Really appreciate that!

Another question if you and others in the forum don't mind, should I sell all my Canadian dollar based mutual funds or ETF? I read somewhere that, as US residents, these Canadian funds will cause trouble with IRS filing. I have some CAD funds in my RRSP only, not sure if that makes it easier situation so I can keep these funds.

Also hopefully somebody in this forum can help with the rental income question in the original post - just wondering if I need to do something about the rent I am collecting, and when I should do these things.

Thanks a lot for the help!

nelsona
Posts: 16514
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Tax planning while leaving Canada: investments, and house

Post by nelsona » Mon Jul 27, 2020 7:37 pm

RRSPs are exempt from trust and PFIC reporting, so the only thing you would need to do in your RRSP is crystalize gains to give you a higher cost basis for future possible US tax.

ETFs and mutuals held outside RRSP, like in TFSA are subject to PFIC and perhaps trust reporting, so can be problematic. See many posts on this.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

cqhg
Posts: 11
Joined: Fri Dec 14, 2018 11:18 pm

Re: Tax planning while leaving Canada: investments, and house

Post by cqhg » Thu Aug 27, 2020 11:55 am

form T1243 has a detail for the stock and other......

also please see form t1161 when your all exceed 25k
the penalty for failing to file this form 1161 by the due date is $25 for each day you are late. There is a minimum
penalty of $100, and a maximum penalty of $2,500.

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