Hi All
I am a permanent resident in Canada since Sept 2009.I just got my Green Card for US approved as well.I own a home here in Canada and I need to move in 6 months to USA .What are the implications if I want to rent my home & sell it later?
Do I need to be in resident status when I sell?I heard about some 25% clause for purchaser of the home,can someone please help in understanding that?
My purpose is any appreciation in home price but I guess it may be offset by capital gain tax in usa + rental income tax(If I rent it out)
Thanks for taking your valuable time!
Sam
Moving to US,home here,should I sell?
Moderator: Mark T Serbinski CA CPA
You do not have to be a resident of Canada when you sell the home. You will need to elect to have the lawyer withold only 25% of the capital gain amount when the home is sold, if you do not elect they will withold 25% of the gross selling price then you file a tax return to claim back teh difference.
You will probably will not be taxed if the home was your principle resdence since any gain is exempt in Canada so and witholding tax is refunded. In the US the cost of teh home is the value it had when you left Canada. Also when you lewave Canada the home is deemed to have been sold so this is your cost for Canada too once you sell it here any gain is taxed unless it was covered by principle residence.
If you rent it out any rent collected is subject to 25% witholding tax and will be reported in Canada and US as rental income less the expenses paid on it, any tax paid to Canada will be allowed in the US as a foreign tax credit.
You will probably will not be taxed if the home was your principle resdence since any gain is exempt in Canada so and witholding tax is refunded. In the US the cost of teh home is the value it had when you left Canada. Also when you lewave Canada the home is deemed to have been sold so this is your cost for Canada too once you sell it here any gain is taxed unless it was covered by principle residence.
If you rent it out any rent collected is subject to 25% witholding tax and will be reported in Canada and US as rental income less the expenses paid on it, any tax paid to Canada will be allowed in the US as a foreign tax credit.
JG
A little bit of clarification.
A Cdn real property is NOT automatically deemed sold when leaving canada, for Cdn tax purposes. One must make an election to do this (T2061A), and there is no point making such election on what was a principal residence, since this would eliminate the extra year one gets to sell one's house tax free.
It is however important to get a good market value determination when leaving as this may become the basis for future tax in US or canada, if one holds the house long enough.
And on the question you raised at anothr site: YOu do not have to sell your house in canada, or even rent it out, to become non-resident, as long as you also have a home (owned or rented) in US and live and work there.
A Cdn real property is NOT automatically deemed sold when leaving canada, for Cdn tax purposes. One must make an election to do this (T2061A), and there is no point making such election on what was a principal residence, since this would eliminate the extra year one gets to sell one's house tax free.
It is however important to get a good market value determination when leaving as this may become the basis for future tax in US or canada, if one holds the house long enough.
And on the question you raised at anothr site: YOu do not have to sell your house in canada, or even rent it out, to become non-resident, as long as you also have a home (owned or rented) in US and live and work there.
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best