Moving Back To Canada
Moderator: Mark T Serbinski CA CPA
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baileybones
- Posts: 14
- Joined: Mon May 30, 2005 8:56 pm
Moving Back To Canada
We are moving back to Canada after spending 9 years working and residing in the U.S. I do have my green card. Two quick questions and I apoligize if these have been asked before: 1) When we sell our house in the U.S., will there be any capital gains tax due? We have lived in it as our primary residence for the last 5 years. Someone told me if you leave the U.S., the capital gains exemption no longer applies and I would have to pay the tax. I think this is incorrect but wanted to check to make sure. With the house price increases the last couple of years, we have a large gain on our house. 2) Does the date matter when we officially start to reside in Canada? I have an open move date. We can either spend 183 days as U.S. residents or 183 days as Canadian residents. Is it beneficial one way or the other which I chose? Thank you.
As long as you sell within 3 years of leaving your house (and don't rent it out) you will pay no gains in US. As long as you sell it within a year from entering Canada you will pay no gains in Canada.
There are no timing issues when returning to canada, as you will become resident the day you move, be it Jan 1st, Jul 1st, or Dec 1st. See the "Newcomers" guide from CRA.
Two things you will want to plan however are to be sure that any large sum US-source income is paid to you before leaving US, so that it is not taxable in Canada.
Since you have a GC, you will of course continue to file a IRS tax return, reporting world income, until you formally relinquish your GC. But since you are not a citizen, you are still entitled to a few (not all) of the tax treaty benefits, including the right to pay cap gains in your country of residence only. So you would be advised to only sell your "winning" investments after becoming resident in Canada, and selling your losing investments before. This doesn't apply to you house, as outlined above.
<i>nelsona non grata... and non pro</i>
There are no timing issues when returning to canada, as you will become resident the day you move, be it Jan 1st, Jul 1st, or Dec 1st. See the "Newcomers" guide from CRA.
Two things you will want to plan however are to be sure that any large sum US-source income is paid to you before leaving US, so that it is not taxable in Canada.
Since you have a GC, you will of course continue to file a IRS tax return, reporting world income, until you formally relinquish your GC. But since you are not a citizen, you are still entitled to a few (not all) of the tax treaty benefits, including the right to pay cap gains in your country of residence only. So you would be advised to only sell your "winning" investments after becoming resident in Canada, and selling your losing investments before. This doesn't apply to you house, as outlined above.
<i>nelsona non grata... and non pro</i>