Rob_999

Moving from Vancouver to Chicago in the Spring, trying to wade through all the tax issues. Think I'm going to need professional advise but thought I'd post on here to try and clarify a few things. (JonboyE - hopefully you can help)

Breaking Canadian Residency
1) How do we officially do this, is there a form to complete to state we're leaving the country?
2) We are planning to keep our home here, and rent it out. Does that cause a problem in breaking tax resident status?
3) My wife is currently on maternity pay - she's been told that she can continue collecting this from the government even once we move to the US. Seems wrong to me - but if this is the case does that effect "breaking ties"? Last thing I want is to be deemed tax resident in Canada....

Tax on Rental Income
1) I presume I pay tax in Canada plus have to report the income in US too, but can deduct tax paid in Canada?
2) Apart from usual - interest, property taxes, maintenance & management fees, what other expenses can I claim? For example - I need to get the roof done, can this be deducted as an capital expense and if so do I depreciate it over say 5 years?
3) From a capital standpoint what is the tax basis on the property? The amount I paid two years ago, or the value when I leave the county (seem to recall a rule about deemed sale of assets?). Value now is probably below cost, and could have a big impact if we don't return and end up selling as an investment property.

RRSP & 401k
From previous posts it seems that if I leave RRSP where it is then there are no tax implications for now. What about 401k in the US? If I pay into that and move back to Canada in say 5 years how is that treated. Can I move 401k into RRSP with no penalties?

That's enough to think about for now. If anyone can recommend a good cross-border tax accountant that would be great.
Rob

G77

Don't have any answers to your questions (sorry), but am interested since a move to the US at some point in the future may be possible with myself....

Have you been promised a route to the ever elusive green card in the US or are you expected to come back at some point?

JonboyE

You don't need to send anything now. You will need to file a 2010 tax return and you will put the date you became non-resident on page 1.

As long as there are tenants in the home it is not available for your use so it doesn't compromise your non-resident status.

Seems wrong to me too. A friend of mine went to live in California and she continued to claim benefits from Canada, but then she continued to file tax returns in Canada. The line from the CRA at that time was that, as long as you are tax-resident in Canada, you are entitled to Canadian benefits. I'll need to look into this further.

This will not be a problem. At worst, you will continue to be a factual resident.

Two situations here:

a) you have a property manager looking after your home/rental. You file an NR6 before the rental starts and before the start of each subsequent year. The property manager collects the rent and pays 75% of the net profit to you and 25% to the CRA. You must file a non-resident tax return each year.

b) No property manager or no NR6. The tenant pays 75% of the gross rent to you and 25% to the CRA. You can choose whether or not to file a non-resident tax return but usually you would because you will likely get a refund of most of the tax.

I don't know much on US personal tax, but you definitely need to report your rental income on you US tax return. I assume you will get credit for Canadian taxes paid, but only up to the amount of the equivalent US taxes.

Yes and no. If your accountant doesn't suggest you try and write the new rood off as repairs and maintenance then get a new accountant. If you capitalize the expense then you could claim a capital cost allowance but it is only 4% pa on a declining balance basis. Unless you are 100% sure that you will not return to the house claiming CCA is not always a good idea.

There is a deemed disposition and reacquisition on the day you cease to be resident so it is the value on this day that is your tax cost for any subsequent capital gain.

I suspect you would be able to import a 401k but I don't know for sure. Best to get some advice from a US accountant about this.

Rob_999

Thanks JonboyE - really appreciate it.

To claim as a repair would we have to get the roof done after we move out - ie once the house is no longer our home, but an investment property? Or could we do it right now (which I'd prefer) and claim that is was a repair necessary to rent it and still deduct from rental income. Also, if the rental income less roof repair = a loss in 2010, can carry this forward to 2011?

So if I get a couple of realtors to value the property now, will the CRA accept that (if we ever get audited) - or do they look at assessed value?

JonboyE

This would definitely be a capital cost.

You deduct a rental loss from other income (e.g employment income) in the year.

Get an appraisal from a professional appraiser to be bullet proof. Cost about $500. Realtor's valuations are much better than nothing but the CRA can check against assessed values and their own valuation models if they decide to be thorough.

JonboyE

Absence from the country

Usually, you are not eligible to receive EI benefits if you are away from Canada. Therefore, you must always let us know whenever you are temporarily outside Canada. However, there are times you may be eligible to receive EI benefits during that absence. For example, you may be eligible to receive sickness benefits if you are in the United States receiving medical treatment that is not readily or immediately available in Canada. If you live permanently in the United States, you can receive regular, maternity, parental, or compassionate care benefits, as long as you meet the requirements. You may also file a claim for maternity, parental, or compassionate care benefits if you reside outside Canada or the United States and you are covered by Canada’s EI program.

http://www.servicecanada.gc.ca/eng/e...bilities.shtml

lmartin999

You can get an official letter at some point which ensures you are seen as non-resident. I don't remember when I did mine on moving back to the UK, but I still have the letter I received. I recall filling in a long form to show I had no ties, there were lots of questions about property, bank accounts etc all of which were designed to show I had no residential ties to Canada.
For various reasons I wanted it confirmed I was non-resident.

Ah, here we are:

http://www.cra-arc.gc.ca/E/pbg/tf/nr73/README.html

NR73 Determination of Residency Status (Leaving Canada)

I agree it is not necessary, but you might like to have it.