permanent moving to USA from Canada

Alwaysdream · Post by **Alwaysdream** » Sun Dec 28, 2008 5:27 pm

What are the best options I have to handle my canadian home and canadian RRSP if I want to settle down in USA, Should I sell my home before or after terminate my canadian residency (from tax point of view), same question for RRSP.

Thank you for your help.

nelsona · Post by **nelsona** » Mon Dec 29, 2008 8:52 am

For your RRSP is is best to sell AFTER leaving, under the condition that you make sure to bump up any 'winning' investments you have by trading them (within your RRSP of course) for another investment. This will give you a hiher BOOK value when you finally do collapse your RRSP.

As to your principal residence in Canada it is far SIMPLER to sell beforehand. but from a tax point of view, it does not matter as long as you sell within 12 months of leaving.

I say simpler, because when selling as a non-resident there is formal paperwork that MUST be filled and submitted prior to sale, to avoid HGE withholding of proceeds pending filing a tax return.

Alwaysdream · Post by **Alwaysdream** » Mon Dec 29, 2008 8:25 pm

Thank you.
I have two question, from Tax point of view, what will happen if I sale it after leaving with more than 12 months, also who will ask if I'm resident or no?

nelsona · Post by **nelsona** » Mon Dec 29, 2008 8:41 pm

If you sell after 12 months, then either a portion of the overall gain, or the gains after you left will be taxable as capital gains (you cannot have your principal residnce in canada if you are non-resident).

Your broker is supposed to ask you.

If you do not sell before leaving, you are advised to get a market appraisal on it for future use.

nelsona · Post by **nelsona** » Mon Dec 29, 2008 8:42 pm

... and if you decide to rent it out after leaving pending its sale, then you need to remit taxes to Govt every MONTH on the rent.

Alwaysdream · Post by **Alwaysdream** » Tue Dec 30, 2008 6:34 pm

Capital gain starting from which price? The original price?
What if my spouse still consider Canadian resident will that solve the issue?

nelsona · Post by **nelsona** » Wed Dec 31, 2008 10:41 am

Once you become non-resident, you are changing the use of your home.

You begin to be liable for gains AFTER you leave (that is why I said you need an evaluation when you leave).

However CRA allows one year 'as if' you still lived there and not have to pay cap gains. I would suggest you use this.

Otherwise you may see yourself owe some small tax for the period after you leave of for a fraction of the overall gain since you bought(whichever is smaller).

Leaving your spouse in canada does maintain a residential tie in canada for you which might complicate matters for taxation. Even if did not make you Cdn resident, you would still have the tax to deal with tax on your half of the house. I don't recommend this. Sell as fast as possible and move to US together if at all possible.

Alwaysdream · Post by **Alwaysdream** » Sat Jan 10, 2009 10:36 am

Each year the city send us an estimated property value to calculate the property tax, will that consider market appraisal for my property?

Also please I want to double check I understood you, you said capital gain from the year I left, not from the year I bought the property and it was my primary resident then. this means if I left Canada 2008 and sell in 2009, the capital gain will be taxed on that period, not from 2003 when I bought the property?

in either case can I subtract the improvement cost I did on the property?

Final question, If I rent, I understand that I should send the tax each month, but will be it different rate? How to report the income as I will NOT be filing tax in Canada, or I still have to?

nelsona · Post by **nelsona** » Sat Jan 10, 2009 11:14 am

Your proprty tax appraisal is not sufficient.

I have already described exactly how your cap gains will be taxed, twice.

"If you sell after 12 months, then EITHER a portion of the OVERALL gain, OR the gains AFTER you left will be taxable as capital gains (you cannot have your principal residnce in canada if you are non-resident).

Please refer to the CRA website for greater detail.

nelsona · Post by **nelsona** » Sat Jan 10, 2009 11:15 am

As to your rental withholding, please refer to the non-resident pages of the cRA website. It will be a flat tax (25%) which can be reduced by reporting your expenses.

nelsona · Post by **nelsona** » Sat Jan 10, 2009 11:17 am

.. and it is not YOU that remits the tax, it is your tenant, or an agent in Canada. You only get the rent minus the withholding.