TN Visa holder selling US Primary residence and return to Canada

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bvadrich
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Joined:Sat Dec 12, 2020 1:55 pm
TN Visa holder selling US Primary residence and return to Canada

Post by bvadrich » Sat Dec 12, 2020 2:05 pm

Hello,

I am a Canadian citizen working in California on a TN visa. Now my family and I are considering returning to Canada. We want to sell our US primary residence. We have no real estate in Canada. What will be the tax implications of selling our US residence? I know that Canada and the US both have a primary residence tax exemption, but I am not sure how my taxes will work if I move after I sell the house. Consider the following situations:

Situation 1: We sell the house on January 1st, move to Canada January 2nd. This would put me under 30 days for the calendar year in the US, and therefore no taxes in the US due to no substantial presence(?). But, what would be Canadian tax implications for selling primary residence in the US?

Situation 2: Sell the house January 1st, move to Canada April 4th. After April 4th I will have to pay US taxes based on the Substantial presence test. But, in this case I would be in Canada for about 8 months - would I have to file Canadian taxes? What would be tax implications of selling primary residence in the US in this case?

Situation 3: Sell the house January 1st, move to Canada July 1st. Have to pay US taxes. Could I avoid filing in Canada?

Thank you for any insight you can provide.

Aside: We tried to sell the house before the New Year, but it did not work out. We went pending twice.

nelsona
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Re: TN Visa holder selling US Primary residence and return to Canada

Post by nelsona » Sun Dec 13, 2020 5:37 pm

Since you have been living in US, and presumably filing 1040, you will be considered tax resident at least until you move, regardless of how many days you are in US that particular year.

I also assume you have not been filing in Canada, since you do not live there, so would only become tax resident when you move to Canada.

Now, as to your US home, it is tax free in Canada if you sell just before you move of course. But it will be tax-free in canada if you sell a few weeks after leaving as well, not because it was your principle residence, but because canada would only tax on the gains made after you return to Canada, which would be negligible,

For US purposes, your sale is tax-free if it gained less than $500K if you lived in it 2 years. so, you can sell this anytime as well within a a few weeks/months of moving.
So there is no timing issue when it comes to your move with regards to selling your home.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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