Tax implications of long term move to Canada

[will]

Hello -- thank you for any clarifications you all might be able to provide. This board has been very helpful, but I have some unanswered questions.

We are US citizens and are considering a move to Ontario to work for a Canadian firm. This will likely be a long-term move, but we will probably return to the US at some point, at least for retirement.

At mid career, we have substantial assets in retirement plans and a house we own outright. The retirement plans include an inherited IRA for which we must take yearly distributions (RMD).

I understand the yearly tax implications of the move and the need to move assets to a Canadian brokerage. We would likely keep assets denominated in USD and make new contributions to RRSP and TSRA with a quick conversion of CAD to USD as we would likely retire in the US if we don't return sooner. Several questions:

1. What is the tax implication of distribution of the inherited IRA? I assume by US law we would need to take a distribution, and this would be income taxable first in Canada and then in the US minus credits?

2. I was considering selling the US home and investing the proceeds and renting in Canada or using Canadian income for a new purchase. This would minimize exchange rate risk. However, it seems that the Canadian departure tax would discourage this as any capital gains would be taxed? It is better to roll the money into a Canadian home, as capital gains on that property would be exempt (or I am reading that completely wrong)?

3. How does Canadian departure tax treat gains in existing IRAs? I understand there are some provisions for RRSPs generated while in Canada.

Thanks again for any thoughts on these issues.

[nelsona]

Forget TFSA, its not a good idea for US citizens.

1. The IRA will continue to be taxed in US as norma1, along with all your other world income. Its taxable first in US, with credit given in canada, because it is US-sourced.

2. If you do not sell the home in US, the entire gains will eventaully become taxable in US, so you might want to sell to lock-in the gains made already tax-free. Departure tax will happen on all your investments except RRSP and residence, based on the value when you arrived in canada (or subsequently bought something), and when you leave. I would be putting the proceeds of the US home into your Cdn home, but whether you do or not doesn't change how the home will be taxed when you laeve (gains will be tax-free. period).

3. Departure tax doe not affect any pension retirement accounts, be they in US in canada, new or old.

[will]

Very helpful, thank you.