residency and HBP?

kcvi · Post by **kcvi** » Tue Mar 26, 2013 4:18 pm

Hi,
I am moving to California from Toronto next month on a TN1 visa. I found this website and it is really great! I got answers for most of my questions through searching, though I am still confused about couple of things. Really appreciate your help!
1. I currently jointly own a house with a common law spouse in Toronto. She will not accompany me to California. Will I still be considered a Canadian resident? Or can I choose to be either a Canadian or a US resident? What will be the better choice?
2. I also have ~15K in my HBP. I read that I need to either pay it back or declare it as income on the Canadian tax return if I were to become a US resident. What is the better option? I donâ€™t have have much income so far this year, mostly EI payments, but will make regular salaries once I am in US. I heard it is better to not pay it back if you leave in January. Does it also apply in my case?

nelsona · Post by **nelsona** » Tue Mar 26, 2013 4:32 pm

It is best for you to declare non-residency, although in your situation you have a choice, as long as you visit Canada regularly. I say this becuase cali taxes are so high that you will not likeloy end up paying more in Canada.

If you did declare non-residency (and not vist canada regularly) You will report the non-payment as income, which should be fine at this point in year.

kcvi · Post by **kcvi** » Tue Mar 26, 2013 4:47 pm

thank you for the quick reply!

I guess since I plan on visiting Canada regularly, I cannot declare the HBP as income?

nelsona · Post by **nelsona** » Tue Mar 26, 2013 6:55 pm

You could always declare the HBP as income. but why would you?

nelsona · Post by **nelsona** » Tue Mar 26, 2013 7:00 pm

Point is, why would your volunteer to break your HBP and declare the income (I 'd have to look and see if HBP rules even allow this -- they may prevent this from occuring).

If you become non-resident, either factual or deemed, you then have no choice.

nelsona · Post by **nelsona** » Tue Mar 26, 2013 7:03 pm

Just checked, you cannot include more than teh yearly amount in your income if you remain resident.
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs ... h-eng.html

kcvi · Post by **kcvi** » Thu Mar 28, 2013 11:57 am

I see, Thanks!
So it may make more sense for me to declare non-residency and file a departure return. Can I use the tax that I have to pay for non-payment of HBP as a foreign tax credit in the US return?
I am still paying mortgage to my house in Toronto. the interest is about $1000 per month and since I own half of the house can I use half of the interest as a deduction if I itemize? and property tax?
Will there be problems if I decide to return to Canada say in 2 or 3 years? I am keeping my options open.

nelsona · Post by **nelsona** » Thu Mar 28, 2013 12:06 pm

You can use the tax tha tyou pay on your Cdn tax return towards a credit on your US tax return. However, the HBP repay is not reported as income on your US return, so I don't see what you would claim the credit against, since you have no other Cdn income. You could use the Cdn tax paid as a deduction.

Yes, your share of the mortgage interest and property taxes are deductible. with that and the Cdn tax, you just maight make itemizing worth it, but that would depend on what other deductions you have.

kcvi · Post by **kcvi** » Sat Apr 06, 2013 7:08 pm

I see! thanks!