Canadian lived in US for 9 years buying a house in Canada

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OttawaSenators
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Canadian lived in US for 9 years buying a house in Canada

Post by OttawaSenators »

My departure return was in 2004 and have not filed Canadian return ever since. The only thing I've left in Canada is a bank account. Now I want to buy a house in Canada while still living in the US. What are the tax implications for both countries?
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nelsona
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Post by nelsona »

It will be a cottage if you don't rent it out, and a rental (duh) if you do.

The rental income and/or gains will be taxable in Canada fist and in US.

Cdn Rental income tax is treated in a special way by CRA for non-residents. See the CRA website for 216 returns.
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OttawaSenators
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Post by OttawaSenators »

Thanks nelsona!
What if I don't rent it out? I won't be living in it though because my job is in the US. Would that be considered ties?
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nelsona
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Post by nelsona »

It's a cottage. Peole who live in US and have cottages in canada are not considered residents -- like Hollywood North in Muskoka.
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Mortgage

Post by OttawaSenators »

I have a new question regarding this topic of owning a cottage in Canada. I cannot get a mortgage from a US bank for a house in Canada. If I get a mortgage from a Canadian bank (assuming it's possible), will that have any tax implications and how will it affect my US income tax return and will it also be considered a tie and make me subject to Canadian income tax? As I've mentioned before, I live in the US and I have a job with a US employer and my only source of income is from this US employment.
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nelsona
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Post by nelsona »

You will need a Cdn mortgage. It does not make you Cdn tax resident. The property wil either be a cottage or a rental. Only the income from the property will be taxable in Canada.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
OttawaSenators
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Post by OttawaSenators »

Thanks a lot nelsona!
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OttawaSenators
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Post by OttawaSenators »

Ok, I’m revisiting this topic of a Canadian expat living in the US trying to buy a condo in Canada and I need some help and info. I’d appreciate any help or info. I’m talking to a Canadian mortgage broker at RBC and I think she’s just trying to sell me irrelevant banking products and she’s not very knowledgable:

1. She says since I am a non resident, I’ll be subject to the extra sales tax the BC gov’t has recently introduced. I doubt that applies to Canadian citizens regardless of their residency status.

2. She says as a non resident I’ll have to put down 35%. Not sure if that is a bank rule or a law. And does that apply even if I am a Canadian citizen?

3. She says in order to lower that 35% to 20%, I should open an investment account with RBC. This does not make any sense to me at all and I’m still waiting for an explanation from her. I’m also concerned this type of account will be considered as a strong tie and subject me to income tax in Canada.

4. She also says I’ll be subject to higher property tax due to being a non resident.

If anyone has any info on any of these issues, please help me.

I also have another option of making my parents who live in Canada as the primary mortgage applicants and I’ll come in as a coapplicant because I have a way much higher income than their pension. However this might complicate inheritance when they pass away.
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nelsona
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Post by nelsona »

1, It might, Contact BC revenue.
2. Your downpayment requirements are between you and the bank.
3. You can't open such an account. She definitely is not the one to deal with.
4. Maybe. Contact the city where you are buying.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
OttawaSenators
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Post by OttawaSenators »

Thanks nelsona for the reply! I figured opening an investment account would trigger income tax issues. And she says all her expat Canadian clients who live in the US do it all the time and then they close the account after getting the mortgage. All these years, I have kept only a checking account in Canada that has nothing in it. I just transfer money into it when I travel back for a visit so I don't have to pay ATM fees. And that checking account should be more than enough to use for making mortgage payments.

Anyway, I'm moving on to other mortgage brokers. I think I'm better off using a non bank employee broker so they won't try to sell me other banking products.
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OttawaSenators
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Post by OttawaSenators »

Here's an interesting FAQ for non-residents who want to buy a property in Canada:
https://www.getwhatyouwant.ca/faq-buyin ... ent-buyers

Once again, she was wrong that I'd be subject to 15% speculation tax. Canadian citizens are exempt from that regardless of their residency. It seems that most of the issues are between the bank (as opposed to the gov't) and the applicant when it comes to being a non-resident.
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nelsona
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Post by nelsona »

The issue with a brokerage account is not taxation, it is US securities regulation. A bank officer who would knowingly suggest that their customers put their brokerage wing in regulatory violation is NOT one I would deal with.

Does the in-house brokerage know that she is suggesting this?

And that speculation tax is NOT federal, it is Ontario and BC only.
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Post by OttawaSenators »

Huh! I didn't think about it from that perspective! Is that the same securities regulations that prohibit a Canadian resident from opening a brokerage account in the US? If so, the same should apply the other way around too. Plus there will also be issues with tax reporting (like how are they going to issue a 1099B for me).

The funny thing is she CC'ed a person in that department to open an account for me and that person hasn't replied yet. The department is called RBC Dominion Securities. I went to that website and found out it is the department that handles RRSP and TFSA!!! What the heck is she smoking?! :lol:
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nelsona
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Post by nelsona »

It IS the same the other way round. A Cdn resident can't open a brokerage account in US either. The principle is that a broker must be licensed in the jurisdiction where the person LIVES. There are special rules that were adopted for retirement accounts only, permitting this for cross-residents.


Note that these rules applies to US residents, not Chinese, so she may be used to dealing with them. they have no such rules against having a Cdn brokerage account.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D
OttawaSenators
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Post by OttawaSenators »

Once again thanks for the reply and the clarification.
I bet that is the issue here because she is based in B.C. and they deal with a lot of investors from Hong Kong. The thing that she keeps saying I have to pay speculation tax shows she has only dealt with Chinese who are neither PR nor Canadian citizens.

I've just sent out an email just plainly out of curiosity what type of investment account she is talking about. Maybe she's talking about just a GIC. I'm assuming GIC is ok to open just to get qualified for a 20% mortgage down-payment. Banks and their stupid rules!
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