I am moving from Montreal to the US, the last week of December (2011), and I will sell my condo in January 2012. Which date should I report as my non-residency to CRA? Is it the date I leave Canada or the date I sell my condo?
I am asking this because If I become non-resident in December and sell my condo in January, I should sell my condo as a non-residence and it will be very complicated I guess (including penalties if I don't report it in 10 days to CRA)
T4056 is saying I become a non-resident the latest of: 1-I leave Canada 2-My wife leaves Canada, 3- I become a resident of the country I move to.
Are they restrict on this role? or Could I simply put the date on which I sold my condo, as my non-residency date on my 2012 tax return?
Which date I become a non-resident?
Moderator: Mark T Serbinski CA CPA
Hey mehran, thanks for coming over here instead.
You have 2 issues: date of departure and reporting of the sale as either Cdn resident or US resident. you DO NOT have an issue with cap gains tax on the sale in either US or canada, unless it takes a year or more to sell.
Ordinarily, the moment you leave canada to live and work in US, you have become Cdn non-resident, either by fact (if you have minimal ties) or by treaty (if you also have a home in canada). It would be nicer if you were moving in november and selling in december, as it would be simple to just declare your moving date as the day you sold your house in december, file your departure return next spring, and that is that.
However, now that your sale is in the next tax year, I would advise that you declare departure now, in december, to allow you to file departure return for 2011, and comply with the reporting requirements of selling your property as a non-resident. All this is a 2 forms, where you prove that you owe no tax, submitted just before or just after your sale.
So, here is your choice:
1. declare departure in december
file departure return not have to report any US income
not have to file a Cdn tax return in 2012 (or at best a non-resident return with no income)
will have to file non-res real estate sale forms
no tax on house
2. declare departure in January
file regular Cdn return, but include any december US income
file a departure return for 2012, again reporting january US income
No real esatte sale form to file
no tax on house
You have 2 issues: date of departure and reporting of the sale as either Cdn resident or US resident. you DO NOT have an issue with cap gains tax on the sale in either US or canada, unless it takes a year or more to sell.
Ordinarily, the moment you leave canada to live and work in US, you have become Cdn non-resident, either by fact (if you have minimal ties) or by treaty (if you also have a home in canada). It would be nicer if you were moving in november and selling in december, as it would be simple to just declare your moving date as the day you sold your house in december, file your departure return next spring, and that is that.
However, now that your sale is in the next tax year, I would advise that you declare departure now, in december, to allow you to file departure return for 2011, and comply with the reporting requirements of selling your property as a non-resident. All this is a 2 forms, where you prove that you owe no tax, submitted just before or just after your sale.
So, here is your choice:
1. declare departure in december
file departure return not have to report any US income
not have to file a Cdn tax return in 2012 (or at best a non-resident return with no income)
will have to file non-res real estate sale forms
no tax on house
2. declare departure in January
file regular Cdn return, but include any december US income
file a departure return for 2012, again reporting january US income
No real esatte sale form to file
no tax on house
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Thanks a lot Nelsona. It is much more clear for me now.
I have 2 more questions:
1- So I guess it will be fine to report my departure date as the date I sell my house in January (and not the date I leave Canada in December)? It is only the complication of having to file another return for 2012. Am I correct?
2- Is there any tax benefit for me if I report departure in December? I guess I don't have to file provincial tax with Quebec, since I am not living in Quebec on December 31. If this is the case what will happen with my US tax return, since this way I will be a US residence in December with no US income and just Cnd income.
I have 2 more questions:
1- So I guess it will be fine to report my departure date as the date I sell my house in January (and not the date I leave Canada in December)? It is only the complication of having to file another return for 2012. Am I correct?
2- Is there any tax benefit for me if I report departure in December? I guess I don't have to file provincial tax with Quebec, since I am not living in Quebec on December 31. If this is the case what will happen with my US tax return, since this way I will be a US residence in December with no US income and just Cnd income.
1. Yes, except that you will also have to include your US wages for december and january on your Cdn return for 2011 and 2012.
2. You will ahve to file a departure return for canada and Quebec. When you leave canada, you file as if resident of the province on last day of residency, instead of dec 31.
So add to the complications that you wil have to file a both QC and Fed returns for 2011 and 2012 if you don't declare departure now.
Once non-resident you never file for QC.
You won't have to file in US for 2011 if you make no US income because your days in US are so few (assuming you have not spent 6 month is US this year for any reason)
2. You will ahve to file a departure return for canada and Quebec. When you leave canada, you file as if resident of the province on last day of residency, instead of dec 31.
So add to the complications that you wil have to file a both QC and Fed returns for 2011 and 2012 if you don't declare departure now.
Once non-resident you never file for QC.
You won't have to file in US for 2011 if you make no US income because your days in US are so few (assuming you have not spent 6 month is US this year for any reason)
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best
Well I guess Nelsona will take care of you on the other side, too bad your leaving La belle province.
Don't forget you may not owe anything on the sale of the home but if you file to reduce the witholding tax based on the gain you MUST file a seperate non resident tax return Federally and for QUebec because you are getting the clearance certificate from both govts and they expect you to file a seperate tax return only on this Sec 216 sale, so you will need to file in both juristictions not just Federal as a non resident for the sale of the home
From then on as a non resident no more Quebec return required.
Don't forget you may not owe anything on the sale of the home but if you file to reduce the witholding tax based on the gain you MUST file a seperate non resident tax return Federally and for QUebec because you are getting the clearance certificate from both govts and they expect you to file a seperate tax return only on this Sec 216 sale, so you will need to file in both juristictions not just Federal as a non resident for the sale of the home
From then on as a non resident no more Quebec return required.
JG