Selling house in Canada after moving to the US

srobert100 · Post by **srobert100** » Tue Oct 26, 2010 12:07 pm

Hello,

I amk currently a PR of Canada, that will be moving to the US (3 to 6 years) and is whishing to claim residence (not citizenship) in the US for tax purposes.

I still have my house in Canada that I want to sell. I was told by a Notary (in Quebec) that if I am no longer a PR of Canada when the house is sold, the Notary will withhold 42% of the total value of the house (not the profit, but the value) for the CRA so that they can verify that all taxes have been paid and then return the remaining of the money to the vendor... and this could take up to 6 months before it is resolved... especially if the necessary paperwork was not done prior to selling the house.

I might also need to pay taxes of the profit done on my house in Canada even if this was my primary residence.

Is this right? What kind of paperwork? Should I continue to declare myself resident of Canada until my house is sold?

nelsona · Post by **nelsona** » Tue Oct 26, 2010 2:26 pm

While it is possible to have so much tax withheld (it will be withheld from the money the purchasder would give you, if you provide all the correct documentation, and becuase it was your primary residence, in all likelihood you will not have anything withheld.

If you sell within the firs tyear of departure, I guarantee you will ahve nothing withheld, provided you file the correct forms before and ffter your sale. Your notaire is clearly not a tax expert, so he should stick to what he knows.

You will no nlonger be residnet of canada as soon as you go to work and live in US, regardless of house, so there is no point faking it. In fact thta would costyou more.

nelsona · Post by **nelsona** » Tue Oct 26, 2010 2:40 pm

And just to avoid confusion, your were a tax resident of Canada (not a PR of canada), and now you are a tax resident of US.

srobert100 · Post by **srobert100** » Tue Oct 26, 2010 10:54 pm

when you say the correct forms before and after the sale, which forms are you talking about?

srobert100 · Post by **srobert100** » Tue Oct 26, 2010 11:02 pm

From the CRA documentation I found that I will be considered a canadian tax resident at the later date of the three following events:

- I left Canada
- My wife and kids leaves Canada
- I am considered a resident of the US

Sine I left Canada to work in the US under to provide independant personnal service and I do not have a fixed base in the US, I am not considered a tax resident of US.

If things goes well I might be offered to become an employee of the company and I would then move to become a tax resident of the US. My wife, kids would then follow me.

srobert100 · Post by **srobert100** » Tue Oct 26, 2010 11:02 pm

Oh, and thanks for your answers, they help.

nelsona · Post by **nelsona** » Wed Oct 27, 2010 7:32 am

By treaty, since you live and work in US (and since you will be working for only the one company, it will be considered your fixed base), you are resident from the day you took up working for them -- you said they have hired you -- you are only being paid as a contrctor temporarily.

You are already considered resident in US.

nelsona · Post by **nelsona** » Wed Oct 27, 2010 8:58 am

Just to elaborate on your incorrect assumption about "fixed base".

The treaty has changes 2-3 years ago such that fixed base (or "Permanent Establishment") now includes an overriding time factor, which you are sure to meet, as sson as you are present in the US for 6 months.

Thta and the fact that your work is solely controlled by your employer, makes you have a fixed base.