moving back to Canada questions

[vduclos]

Hi,

My family and I have been living in the US on a green card for almost three years. We're planning a move back to Canada (Quebec) in the coming weeks. Here are a few questions, some fairly basic but I could not find the answers scrolling through past posts.

1. We will sell our house in the US. We've owned it for 1.5 years and will make a decent gain (lots of renovation). It is my understanding that even though we've not owned the house for 2+ years, the capital gain would not be taxable since we sell to go work in a remote location (got a new job in Canada). Am I correct? Will I have to submit proof of relocation when filing for 2020?

2. Because of Covid-19, we are on a tight timeline. What are the pros and cons of closing only after we moved back? Intuitively my thinking is it is probably safer tax-wise to still be a resident at the time of closing. Is it? Or is closing 2-3 weeks after moving back also fine? Since Covid-19 prevents seamless circulation across the border, we can't really mess this one up.

3. I have a 403(b) Plan through my employer. I have no plans of moving back to the US in the near future. Better to cash out or rollover to IRA and wait it out (59 yrs old is in a long time though).

many thanks!
Vincent

[nelsona]

1. Since it was not your main home for the full 2 years, you do not get the full $250,000 exclusion each, but, because this is a move for work, you get a partial exclusion (you can calculate this in IRS Pub 523). Roughly 3/4's of the full amount.
Remember that renovations may add to your cost bases, so you should track these.
2. You still have a GC, so you are considered resident, so it odes not matter from IRS point of view. You would owe no tax in Canada even if you sold a few weeks later, since your selling costs would be more than what you 'gained' in the weeks living in Canada.
3. If your employer plan allows, you can leave it with them. Otherwise you need to find a broker that will deal with Cdn residents (Schwab is one).

[vduclos]

Thanks.

1. It would be 2 full years at the end of Sept. So given your response to '2', maybe waiting for the full 2 years would make sense?
3. You mean I would transfer the funds to Schwab long-term, or just for long enough to cash out once I'm in Canada? Not sure I understand.

[nelsona]

1. Are you really making $500,000 gain on this house?! I woud be selling as quick as possible in this market.
3. If you are planning to cash out, then do it before becoming Cdn resident, otherwise your withdrawal will be subject to Cdn tax.