Glad to find this forum here. I read a lot of posts in the past few days and learnt a lot. I am a Canadian citizen who is going to SC USA soon to work with a 3year TN status. I still worked in Canada from January to March 2015. I bought a house as my principle residence seven months ago as first time home buyer and I am planning to rent it out when I leave Canada.
1. The house to be rented out is my only tie in Canada. Am I a non resident of Canada for tax from April 2015? Do I have to submit a NR73 to determine my status? Shall I consider return my OHIP and Ontario driving licence, so that I can be determined as a non resident? If I give up these ties, will it jeopardize my TN renewal three years later?
2. As a first time home buyer. I used HBP and withdraw money from RRSP. Before I leave Canada, I am going to return the money back to my RRSP and invest mutual funds. Anything improper here? Can I sell and buy / adjust my invest of RRSP while I am in USA later?
3. When I move out and rent my house, it seems that as a non resident, I have to option to continue treat the house as my principle residence for 4 additional years. It means if I am going to sell it after 4 years, any gain on the sale of this principle residence is tax-free. Does it apply to my case when I sell it when I am in USA? Any foreign tax liability issue?
4. I can also change the house to rental property. Shall I report a capital gain then? Shall I dispose and reacquire this house when I leave Canada? When I sell this rental properties 4 years later, what's the tax difference compared with the case when I hold and sell it as a principal residence?
5. Non resident can file form NR6 "undertaking to file tax return by a non-resident receiving rent from real property". Can I use this rule if I choose hold the house as principle residence or change to rental property?
6. Can I contribute 401k when I am working in USA on a TN status?
Thank you!
Rental income question in canada
Moderator: Mark T Serbinski CA CPA
1. you will be an emigrant. File 2015 Cdn retun for your last province of residence, with May departure date. Read thje emigratnts guide from CRA so that you will nt be surprised next spring with the requirements. in 2016 you will be considered non-resident. Your DL and OHIP are of little value to you in US, and will dier anyways. You do not need to maintain ties while on TN.
2. Most RRSP dealers will not allow you to add funds to RRSP after leaving canada, so it would be best to repay HBP before leaving, even though CRA gives you 60 days.. You will also have to make sure your RRSP firm will deal with you. You typically have to move your accounts to a brokerage, like TD waterhouse.
3. That is not correct. Your Cdn home cannot be your PR while a non-resident of canada. You will be tax-free however if you sell within ONE year, not four, assuming you do not rent it out (in which case you are liable for any CCA recapture. In US you must depreciate rental, so you may also do this in Canada. US gives you three years to sell before being taxable (except for depreciation recapture).
4. If you rent the house, it IS rental property. See 3. You really don't have any choice in this.
5. No, you must remit 25% witholding monthly to CRA. NR6 only determines that the witholding will be 25% of gross or net. And a section 216 tax retunr will determine the tax in any case.
6. Yes. Cionsider making Roth401(K) contributions if you intend to retunr to canada, as thees ewil lbe forever tax-free, while 401(K) income will be taxable.
2. Most RRSP dealers will not allow you to add funds to RRSP after leaving canada, so it would be best to repay HBP before leaving, even though CRA gives you 60 days.. You will also have to make sure your RRSP firm will deal with you. You typically have to move your accounts to a brokerage, like TD waterhouse.
3. That is not correct. Your Cdn home cannot be your PR while a non-resident of canada. You will be tax-free however if you sell within ONE year, not four, assuming you do not rent it out (in which case you are liable for any CCA recapture. In US you must depreciate rental, so you may also do this in Canada. US gives you three years to sell before being taxable (except for depreciation recapture).
4. If you rent the house, it IS rental property. See 3. You really don't have any choice in this.
5. No, you must remit 25% witholding monthly to CRA. NR6 only determines that the witholding will be 25% of gross or net. And a section 216 tax retunr will determine the tax in any case.
6. Yes. Cionsider making Roth401(K) contributions if you intend to retunr to canada, as thees ewil lbe forever tax-free, while 401(K) income will be taxable.
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
This is such a helpful form. You're a patriot for helping us out, really, you are.
I was looking for something on how to fill out Section 216 for my rental property in Canada. But saw your comment a bout Roth 401K. I should probably read up on it on my own, but how does that help contributing to this versus the regular 401K that my company matches in contribution for me? I guess what I mean to ask is, what tax implications await me once I return to Canada and when I try to catch the Roth?
Also, my uneducated assumption was that 401K was like the US equivalent of RRSPs. Is this correct? Or a good resource to read up on these, and other investment vehicles? Is the Roth like a TFSA?
Since I'm asking... When I input the same numbers from my NR4 (NR6 was approved) in the Section 216, I am owed a refund via Section 216. Am I screwing up the numbers? The gross net income was less than 5K US.
Please advise.
I was looking for something on how to fill out Section 216 for my rental property in Canada. But saw your comment a bout Roth 401K. I should probably read up on it on my own, but how does that help contributing to this versus the regular 401K that my company matches in contribution for me? I guess what I mean to ask is, what tax implications await me once I return to Canada and when I try to catch the Roth?
Also, my uneducated assumption was that 401K was like the US equivalent of RRSPs. Is this correct? Or a good resource to read up on these, and other investment vehicles? Is the Roth like a TFSA?
Since I'm asking... When I input the same numbers from my NR4 (NR6 was approved) in the Section 216, I am owed a refund via Section 216. Am I screwing up the numbers? The gross net income was less than 5K US.
Please advise.
Your company wiill do match regardless of whther you contribute to their 401(k) or their Roth401(k).
Their match will be to the "non-Roth" portion.
On 216, your Nr6 was merely an estimate. Once you file your 216, you could easliy ewnd up with a little owing or a little refund. That is why you MUST file 216 if you file NR6.
Their match will be to the "non-Roth" portion.
On 216, your Nr6 was merely an estimate. Once you file your 216, you could easliy ewnd up with a little owing or a little refund. That is why you MUST file 216 if you file NR6.
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
Really not a concern.
But recall that with the NR6 CRA authorizes your agent to withhold at flat 25% of net.
When you do the 216, your tax rate, if your net rental is less than $44K, will be only 22.2% (15% plus 48% of that) 15 * 1.48 = 22.2.
So, even if your number match NR6 exactly, you should expect a 2.8% refund.
But recall that with the NR6 CRA authorizes your agent to withhold at flat 25% of net.
When you do the 216, your tax rate, if your net rental is less than $44K, will be only 22.2% (15% plus 48% of that) 15 * 1.48 = 22.2.
So, even if your number match NR6 exactly, you should expect a 2.8% refund.
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
Last year, because I didn't know any better. The NR6 was submitted with just my name on it, and approved by the CRA. So do I still put my wife's name on the rental statement/S216 and indicate that she co-owns 50% or just leave her name out of it and claim the 100% myself?
Does it matter for S216? Will I, in any case, need to do file two rental statements and two S216s?
Does it matter for S216? Will I, in any case, need to do file two rental statements and two S216s?
I would just claim it all. I assume you are filing jointly in US, so there will be no issue for you using the Cdn taxes jointly on your IRS 1040 and 1116.
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