Us resident getting married to Canadian resident
Moderator: Mark T Serbinski CA CPA
If you file a joint 1040, which would give YOU the better tax rate, you must include all her 2007 income. You then use either 2555 to exclude her CDn wages and/or 1116 to get credit for Cdn tax.
i'll get back top you on NR6, better yet, you call CRA and report back.
i'll get back top you on NR6, better yet, you call CRA and report back.
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Another question for you. If we have my wife's sister (canadian resident) move in to our condo and not charge her rent only pay utilites, will we have to pay capital gains tax when we sell the condo? This would be her principal residence. Would we have to report this to CRA? Looking at options to reduce capital gains tax, as we expect the property to increase in value over the next year, and also do her a favor. Thanks.
having a home that you 'rent' or give to your family is considered to maintain you as a cdn resident.
Its not the end of the world, since the treaty will then allow you to exclude your uS income from Cdn taxation, but it makes things more tricky.
But, from the point of view of taxation on your house, you will be considered to have given up that house as principal residence on the day you leave for uS. By normal rules, you will be able to sell it tax-free (jn Canada) for upto one year after you leave. After that, *some* of the overall gains made on the house will be taxable.
Its not the end of the world, since the treaty will then allow you to exclude your uS income from Cdn taxation, but it makes things more tricky.
But, from the point of view of taxation on your house, you will be considered to have given up that house as principal residence on the day you leave for uS. By normal rules, you will be able to sell it tax-free (jn Canada) for upto one year after you leave. After that, *some* of the overall gains made on the house will be taxable.
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Ok so if my soon to be wife comes to the US in October we have one year from then to sell the house and the gains become tax free? And if I understand correctly, after that one year we will have to pay 50% of half the capital gains from then on. So if in 2008 it appreciates $10000 we would have to pay $2500 in capital gains tax? What kinds of records do we need to keep and show CRA to prove how much it is worth?
There are 2 methods of calculating the taxable gain, neither of which you have correctly described.
you will pay whichever is the smaller of:
1.on the gains from the day you left Canada, or
2. a percentage of the total gains, from puchase to sale, based on the ammount of time you owned the home, and the tim it as our principal residence (plus one year). In other wors if you owned the home 5 yers, and it was your principal residence 3 years, ou would get 4/5th of your total gain non-taxable :(3years +1)/5 years. That is where the 'one yar after departure' rule comes into play.
So you need a market eval about the time you leave Canada, to accurately determine option 1.
you will pay whichever is the smaller of:
1.on the gains from the day you left Canada, or
2. a percentage of the total gains, from puchase to sale, based on the ammount of time you owned the home, and the tim it as our principal residence (plus one year). In other wors if you owned the home 5 yers, and it was your principal residence 3 years, ou would get 4/5th of your total gain non-taxable :(3years +1)/5 years. That is where the 'one yar after departure' rule comes into play.
So you need a market eval about the time you leave Canada, to accurately determine option 1.
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You need to complete all the required forms to report your holdings when you leave canada, as outlined in the "Emigrants" guide from CRA.
You will then need to file 2 or 3 forms just BEFORE you sell the property asa non-resident.
You will then need to file 2 or 3 forms just BEFORE you sell the property asa non-resident.
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Even if your real estate was taxable (say you owned a rental), you would not generally report it as a deemed disposition when leaving canada, you would be allowed to wait until actually disposing of the property, since it is always taxable in canada. you would only report it on T1161.
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Hello again,
We have found a renter for our condo in Canada starting October 6th. My wife is leaving for the US a few weeks after that (staying at her mom's). So we dont have to send in a NR-4 and cheque for October rent since she is still a Cdn resident? After see arrives in US we can file a NR-6 to reduce withholdings, but until then and starting in November we need to send in a NR-4 with 25% of gross rent? Then we will file under section 216 in the spring for our rental income? Just want to make sure I have everything in order. Thanks.
We have found a renter for our condo in Canada starting October 6th. My wife is leaving for the US a few weeks after that (staying at her mom's). So we dont have to send in a NR-4 and cheque for October rent since she is still a Cdn resident? After see arrives in US we can file a NR-6 to reduce withholdings, but until then and starting in November we need to send in a NR-4 with 25% of gross rent? Then we will file under section 216 in the spring for our rental income? Just want to make sure I have everything in order. Thanks.
If you are already non-resident, isn't some of this income yours? If so this would seem to indicte that at least some of the renatl income should be considered NR, subject to withholding.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing