US Property Ownership (and confirmation on tax questions)

a and m · Post by **a and m** » Wed Apr 03, 2013 11:48 am

Thank you for this forum and resource. I have searched and combed many posts on the site and found what I think are most of the answers my canadian fiancee and I need for her to move to the states with me (USC) and protect her current assets. I have one question left and hope the balance of my answers found here are correct.

Believe correct so far
1: Upon quitting her job, have her company pension rolled over into her RRSP before becoming a non-resident of Canada.

2: Leave her RRSP intact and invoke treaty tax deferral (of course filing the proper form 8891 when filing US income taxes)

3: Xfer her current savings (>$10,000) to a US bank or set up a borderless acct with RBC or TD and use that to access/transfer funds)

4: Deal with the myriad of non-financial hurdles the visa process brings (import car, forms forms forms...time) :)

That leaves the question - she and I plan to buy a condo here for our residence. Can we jointly buy this property (downpayment from her, mortgage to me only, deeded to both of us) without process/penalty/tax ramifications in Canada? The best I could find is the CRA is only interested in foreign property if it generates either income or capital gains for a Canadian resident...

Thanks in advance for any consideration/advice.

JGCA · Post by **JGCA** » Wed Apr 03, 2013 1:19 pm

!) OK
2)Ok file the 8891 annually get the values on the date you moved into US
3)If you want to trf money from Canada and open up a brokerage account in the US that is fine

4)Buy a Condo in the US both names Joint ownership is fine. The CRA is only interested if you own more than $ 100 K in assets abroad but a primary use home is not reported at all on the T1135 form so unless you are still a CND tax resident this was not even an issue.

a and m · Post by **a and m** » Wed Apr 03, 2013 1:28 pm

Thank you for the swift reply JGCA, I appreciate it.

On my last question - We plan to purchase now, and I will live there and she will remain in Canada (renting) while we go through the IR-1/CR-1 Visa Process. Depending on Visa Timing, she may remain a CND tax resident for all of 2013...still no issue?

Thanks Again.

JGCA · Post by **JGCA** » Wed Apr 03, 2013 1:33 pm

If she is a CND resident then she does not need to deal with the RRSP and 8891 unless you are filing jointly. No issue on the Condo its not a reported item for CRA if its not rented out .

a and m · Post by **a and m** » Wed Apr 03, 2013 1:35 pm

Thank you so much. I appreciate the time and advice you all offer.
:D

a and m · Post by **a and m** » Wed Apr 03, 2013 1:46 pm

Sorry for the post close question...I just want to recap.

1: She and I purchase the condo now
2: We get married and begin the IR-1/CR-1 visa process (I remain here and live in condo, she rents and remains working in Ontario)
3: As we are close to the end of the visa process, she quits and rolls her pension into her RRSP
4: She gets her savings transferred or setup for borderless access
5: She moves to the US with me on the visa
6: She files a CRA "exit return" per the Emigrants guide
7: When we file taxes in the year following her arrival, we fill out the 8891 and defer taxes. (we also consult with tax professionals to make sure we are filing correctly)

All good?
Thanks

JGCA · Post by **JGCA** » Wed Apr 03, 2013 2:48 pm

You say she wants to remain a resident of Canada for all of 2013? If so then she does not file an exit return until 2014.

a and m · Post by **a and m** » Wed Apr 03, 2013 3:09 pm

That will depend on when her visa is approved and when she can emigrate, so if that happens then I follow you fully - we file the exit return for the year that she emigrates.

a and m · Post by **a and m** » Wed Apr 03, 2013 3:11 pm

The balance of my gameplan is good though?

nelsona · Post by **nelsona** » Wed Apr 03, 2013 3:35 pm

She will not be able to roll her PENSIONinto her RRSP. No doubt -- if the firm releases her pension -- it must be put into a locked-in account. It is best to keep LIRA and RRSP separate.

a and m · Post by **a and m** » Wed Apr 03, 2013 4:56 pm

Thank you for that wisdom nelson...I will dig into it. I am certain they will release it (she read the language from her pension statement she just received to me last night and it did address rollover after leaving the company...but to your point, I am sure there are specific types it can be rolled into). Are there tax consequences to putting it in a locked in account?

nelsona · Post by **nelsona** » Wed Apr 03, 2013 5:06 pm

No tax consequences, the rollover is a non-event in Canada.. .and thus a non-event in US.

The funds will be locked, they can eventually be broken, but only to take the entire amount as a lump-sum, and all of it taxable in Canada and US.

Not as flexible as your RRSP, which is wh yyou don;t want to mix the two.

a and m · Post by **a and m** » Wed Apr 03, 2013 6:07 pm

Clear on the difference now - thanks for helping me understand it

By taxable in Canada and the US, do you mean taxable as income subject to where you are living at the time? (i.e.- When she retires she would declare it as income in the country she is a tax resident of)

We are not sure if we would stay in the USA forever, and also not sure that she would seek naturalization in the USA.

Thank you again

nelsona · Post by **nelsona** » Thu Apr 04, 2013 6:46 am

Your Cdn pensions will ALWAYS be taxable in canada.

They will ALSO be taxable in US if you live there or if you become US citizen. There would be foreign tax credits available to lower the US tax.

a and m · Post by **a and m** » Thu Apr 04, 2013 7:20 am

Understood. Thank you both for your assistance