Question about property in Canada

[shembs]

Hi there,

My family and I have emigrated from Canada to the US in 2019. We are US tax residents and green card holders. When we left Canada we decided to keep our former principal residence as a vacation home. We visit and stay in the house for a couple weeks during winter and summer school breaks. During the remainder months, it is left vacant.

My parents who currently own a condo in Canada want to sell their condo and move into our home to make it their principal residence. I wanted to know if there are any tax implications on my end as a non-resident of Canada if my parents decide to go this route. Do I need to inform anyone or complete any documentation pertaining to this possible move.

[nelsona]

If they simply move into your old house, there is nothing to document, as long as you do not claim any expenses. It hasn;t been your principal residence since 2019 in any event.

If however, they buy it from you (which would make it their principal residence) then this is a sale, probably triggering some cap gains tax in Canada and US.

If they rent it from you at a FAIR market price, then it is like any other property rented out, with income and expenses reported in both countries. If however you rent it at LOWER than market rate, you need to report the income (in both US and Canada) but generally cannot claim any expenses.

[shembs]

We do not plan to sell it or rent it out to them. Nor claim any expenses. They're retiring soon and want to be closer to other family members that's all, and we are okay with that. So I guess there is no tax required paperwork on our end in this situation.

Given this response, do we (the actual homeowners) need to consult with a lawyer regarding allowing my parents to stay in our current vacant home. In other words have some sort of legal documentation for them to state that property is now THEIR residence if they decide to move. Or would they do this by simply changing their address with government services?

Also, since we are the actual homeowners, would it be considered their principal residence?

[nelsona]

There is no need to have a designated principal residence if they cannot sell it, just like when you were a kid living at home. They simply live there. It is their home.

It becomes their permanent address, if that is what you mean.