TN visa with property in Canada - Capital Gain Tax

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jimyi
Posts: 2
Joined: Wed Mar 13, 2019 10:54 pm

TN visa with property in Canada - Capital Gain Tax

Post by jimyi » Wed Mar 13, 2019 11:27 pm

Hi,

I'm moving to US in this April for a new job on TN visa. I'm deciding if I should sell my primary resident condo property now or rent out.

if sell right now, then no tax consequence.
if rent, and sell later, with below timeline:
- Dec 2015 - Bought Primary resident condo property in Canada
- Apr 2019 - Move to US on TN visa and rent out at the same time (Fair Market value of the property $500K)
- Apr 2020 - Sell my condo (Fair Value of the property let's say $530K)

1. Other than paying tax on the rental income, do I still need to pay capital gain on the 30k portion?
2. My understanding is that if the condo is still counted as my primary residence at the time of sell, I get exemption of capital gain tax. Is that right?
3. Based on NR 73, I will have tie in Canada in Apr 2020 (Canadian bank account, driver licence, health card). Is it sufficient to prove that the condo is my primary residence?
4. My real estate agent mentioned that I need to have an appraisal on my property now. Is it necessary if I can get exemption of capital gain tax?

Thanks,

nelsona
Posts: 15897
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: TN visa with property in Canada - Capital Gain Tax

Post by nelsona » Thu Mar 14, 2019 11:44 am

1. For homes that once were your principal residence (PE) you get one year tacked on after departure to sell, without incurring any taxable cap gains. You get three years before the property sale becomes taxable in US.
2. See 1. A non-resident, which you will be in April, cannot have a PE in Canada.
3. See 2. Your ties are not sufficient to make you resident.
4. You agent is very wise. If you do not get an appraisal when you leave, you will not be able to segregate the pre-departure and post-departure gains, and your tax (say, you sell in 2 years or 4 years), will be based on a portion of the entire gain, rather than just the post-departure gains, which may be less.
Nelsona Non grata. Non pro. Search previous posts. Taking period between now and June off. Will only answer sporadically.

jimyi
Posts: 2
Joined: Wed Mar 13, 2019 10:54 pm

Re: TN visa with property in Canada - Capital Gain Tax

Post by jimyi » Thu Mar 14, 2019 12:25 pm

Thanks nelsona for your response.

so if I understand correctly, as long as I sell my condo within one year of moving to US (Apr 2020), I will not pay any tax of capital gain. is that correct?
Does that change if say I return back to Canada in 2021 and sell my condo at that time?

nelsona
Posts: 15897
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: TN visa with property in Canada - Capital Gain Tax

Post by nelsona » Thu Mar 14, 2019 1:12 pm

Of course it changes.

You will have a year's worth of cap gains to pay. Your period of being tax-free ends in April 2020. From that date forward, you will be subject to some cap gains. The longer after that, the more % of your total gain (since 2015) becomes taxable:
April 2020: 0%
April 2021: 18%
April 2022: 31%
April 2023: 40% and US taxation.
Nelsona Non grata. Non pro. Search previous posts. Taking period between now and June off. Will only answer sporadically.

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