Skittletop

Hey Guys,

Need some advice on tax implications when selling a house when not resident in Canada.

I'm moving to the states for work real soon (a couple of months) I have my home on the market, but no interested buyers so far.

I understand I don't pay capital gains on my home if I sell as a resident, but what happens if my house doesn't sell (or close) by the time I start work in the US?

This is my only property and I've lived in it for nearly eight years. I have my Canadian citizenship.

Any one here had a similar circumstance, what did you do? Any advice greatly appreciated.

Cheers!

Aviator

https://www.canada.ca/en/revenue-age...emigrants.html

Non-Residents Selling Property in Canada | TCG Chartered Professional Accountants LLP

Non-residents selling their Canadian home be warned

Pulaski

Under US CGT rules, to qualify for the $250k/$500k (depending on whether you file singly or jointly with your spouse) gain exemption you have to have lived in your home for "two of the last five years" when you sell it. In other words you have 36 months to sell it after you move out of it.

Aviator

The US CGT rules are likley not the issue. The issue is going to be Canadian CGT. As the home will no longer be their primary residence and they have moved away from Canada. Deemed disposition is going to be a factor. Should always get professional advice in these circumstances.

Pulaski

That was pretty much my point/ is the logical conclusion of the US rules. BUT he will have to declare the sale on his US tax return if he is resident in the US when the sale closes, so it makes an sense to know the rules, which is why I mentioned them.

I am not qualified to comment on the Canadian rules, which is why I did not do so.

dbd33

I can recommend an expert on Canadian CGT, "deemed disposition", and mitigating the impact. I've never met him but his work by email has been stellar. PM me if you want the contact info.

Aviator

The Canada/US tax treaty should take care of double taxation.

Pulaski

Kind of - but the tax treaty doesn't mean he can entirely ignore the US tax angle!

The tax treaty doesn't alter the fact that if he is living in the US when he finally sells his home he must put the sale proceeds on his US tax return, and and hypothetically (because in this scenario he is unlikely to create a taxable gain in both countries, though it is certainly possible), he could still end up paying some tax in both countries with the tax treaty only ensuring that he gets credit for the tax paid in Canada against the tax bill in the US.

E.g. Tax paid in Canada = US$5,000, tax bill in the US US$6,000, tax paid in the US US$1,000 being the $6,000 billed less the $5,000 already paid in Canada.

dbd33

I'm currently selling a business in the US and am quite keen to avoid CGT in either country, as well as withholding taxes that might be refunded one day. This way around compliance is complicated and depends on the precise filling in of forms, I imagine it's the same going the other way across the border. There are experts, they live in the internet. I hired one, I would do that if I were in the OP's shoes.