Canadian citizen returning from US after 6 years

canuckgoinghome · Post by **canuckgoinghome** » Tue Nov 01, 2011 4:14 pm

I have been working here in the US for 6 years now on TN Visa's. I will be returning to work in Canada in the new year and have a few tax questions for those of you in the know!

I am a non resident of Canada for tax purposes since 2006 and have only paid US tax. I own a home here in the US as well as vehicles and such. My biggest question is about my US tax filing when I leave and how I will handle my house which will become a rental property and how I report my Canadian income on 1099 if need be? Also, is there anything I should do in advance before returning to Canada in terms of tax or residency documentation or does it matter since I will start to pay CRA again immediately once I start work.

Thanks in advance,

canuckgoinghome

canuckgoinghome · Post by **canuckgoinghome** » Tue Nov 01, 2011 5:30 pm

EDIT: 1099 above should be 1040....of course lol

JGCA · Post by **JGCA** » Tue Nov 01, 2011 8:37 pm

THe rental income from your US house will ofcourse be subject to both US and CND tax once you return to Canada. In the US if you file as a non resident there is the 30% witholding but if you file as a USC this will not apply but its still reported on your 1040 as you say.

In Canada you pay tax on the rental but get credit from the US tax you paid as a FTC. Important difference is depreciation you do not have to claim it in Canada but are required to claim it in US.

nelsona · Post by **nelsona** » Tue Nov 01, 2011 9:38 pm

It will be crucila to have a rock solid fair market valuation done on your uS property, as this will become the basis for future Cdn taxation.

Just a note that as a non-resident, you can elect to treat the renatl income as effectively connected income (which it obviously is) and thus calculate the tax on the 1040 usung the schedule rather than flat tax. This will be much less tax, which is desireable when matching credits on your Cdn return.

canuckgoinghome · Post by **canuckgoinghome** » Wed Nov 02, 2011 4:29 pm

Thank you for the replies! One other question, when it comes time to sell the property...is there a time frame where I am exempt from taxes on the gain? I have lived in the home for over 2 years so I would not pay tax on it if I were to sell and stay in the US but does that change since I will most likely be back in Canada when I sell?

Thanks again.

nelsona · Post by **nelsona** » Wed Nov 02, 2011 5:01 pm

Once you rent the house it loses its 100% tax-free status in US and Canada.

For US purposes the tax will be a portion of the entire gains, plus recapture of depreciation. If you sell after more than 3 years out of the house, none of the gain will be tax-free.

For Canada the taxable gain will be from date of arrival in Canada (plus any CCA recapture).

canuckgoinghome · Post by **canuckgoinghome** » Wed Nov 02, 2011 5:47 pm

Thanks for clearing that up!