Andy Woody

Hi

We are moving to Edmonton in September. We have a house in Herts

My question is a tax one. Do we need to sell our house before we become resident in Canada? I don’t want to end up paying tax on the sale. My sister lives in New Jersey and can’t sell hers because of the tax implications

Thanks for any help

bc2015

If you don't sell it before you leave, then when you become resident of Canada you are deemed to have disposed of and immediately reacquired the house at the current market value. If you sell it while in Canada, then any gain above the current market value when you entered Canada is subject to capital gains tax but I think this can be written off against any capital gains tax paid in the UK.

If you rent the house out while in Canada, then you will need to income tax in Canada on any income earned (minus expenses) but you get any income tax paid in the UK as a credit.

The TL;DR is that it is possible to sell a house while in Canada, but it's a bit of a pain to take care of the tax situation. CGT in Canada is calculated by adding 50% of the gain to your earned income, so in some provinces the CGT rate is effecively 26%. If you are planning to make the move permanent then I would strongly consider selling it (but obviously I don't know your circumstances).