Canada Home Buyers Plan & RRSP Withdrawal to IRS? - Expert Income Tax help on cross Border tax and immigration and divorce a

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question: Dear Tax Expert

I would really appreciate your advice. I am Canadian living in the US. In 2005 I withdrew some funds tax free from my RRSP to purchase a rental home under the home buyers plan.  I moved to the US in 2009 and that same year sold the house. As a deemed non-resident in 2009, the CRA had me declare the 2005 RRSP funds as income in 2009 (had to pay all taxes on that since I left Canada). My question is:

-	Do I also have to declare the 2005 RRSP withdrawal as 2009 income to the IRS using form 8891? This doesn't make sense to me since there wasn't an actual distribution in 2009 (as per the RRSP statement) and I can't put a number in line 7a in form 8891   

Thanks a lot!!

 

david ingram replies

The first error was that a HBP can NOT be used to buy a rental house -  It has to be used to buy a house that you lived in so properly, the RRSP withdrawal was taxable in 2005.

You do not have to report the Withdrawal on form 8891 because you made the withdrawal BEFORE moving to the US and presumably declared it on the departing Canada Tax from along with Forms T1161 and maybe 1243 and 1244..

However, if you still have any balance in an RRSP in Canada, you have to be sure to report them on form 8891 and if the total exceeds $10,000 fill in forms TDF 90-22,.1 as well

And, of course, an other Canadian or German or Australian, etc accounts must be reported as well.
 
 

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