Deemed Deposition over my principle house in US upon exiting to US

[cakik55]

Hello,

I moved to US in June in 2021 with a green card. My husband (US citizen) and I (Canadian permanent resident) bought a house which located in US back in Apr 2020. This is our principle house. Since I emigrated from Canada, I understand that I need to submit T1161 for our house as part of my las Canadian Tax return for 2021. This deemed deposition is explained as "If you ceased to be a resident of Canada in the year, you were deemed to have disposed of certain types of property at their fair market value (FMV) when you left Canada and to have immediately reacquired them for the same amount. " (from Canada.ca)
Then it is said that "you have to report any capital gains or capital losses that results from your deemed disposition."
As described above, we are deemed to dispose our house at FMV on my departure day and reacquired it for "the same amount". So there wouldn't be any capital gain or loss. Meaning for T1243 form, column (5) Fair Market Value on the date emigrated must be equal to (6) Adjusted Cost Base, then (7) Gain or Loss is $0...Correct?

Furthermore, is it even possible any types properties can generate capital gains or losses since they are deemed to be sold and reacquired for "the same amount"? Shouldn't be it always $0? I am so confused. Please help me!

[nelsona]

While a Canadian resident, you are allowed to list a foreign residence as your principle residence and get the tax exemption.

But you are not interpreting the form correctly: If you have investements that are deemed disposed, you would owe tax on the gain based oin the cost when you bought it (April 2020) and the FMV when you were deemed to have sold it (JUne 2021). There woukld clearly be a gain there.

Do this for all your holdings on that date. But AS I said, the house can then be exempted.

[cakik55]

Thank you, nelsona!

We are still living in the house as our principle residence and I don't have any investments.
So for this house, I just need to file T1161 but not T1243? or I still need to file T1243 with
The amount under column (5) Fair Market Value on the date emigrated = The amount under (6) Adjusted Cost Base, then (7) Gain or Loss is $0?

[nelsona]

You still need to report the house, and the deemed diposition, which will require a FMV evaluation for the date you left. It is NOT the cost you bought the house for. It goes on the capiatl gains schedule as well.
THEN, you exclude the deemed sale using the forms for principal residence exclusion.

[cakik55]

Thanks again, nelsona!
Yes I will fill out schedule 3 and designate out house as a principle residence so to get the exemption!
One more question just to make sure, the adjust cost base should be the same as the FMV so to make the gain to be $0?

[nelsona]

For the third time, the PRICE YOU PAID is the ACB.

The FMV is the evaluation that a local realtor will give you for the time period you became non-resident of Canada (june 2021). It WILL NOT BE THE SAME VALUE AS your ACB/ YOU WILL HAVE A GAIN TO REPORT on Schedule 3 and include this value on departure forms T1161 and T1243. IT WILLNOT BE ZERO/

You will THEN exclude that gain using the PR exclusion.

[cakik55]

Thank you, nelsona! Now I understood!