Capital gains on US principal residence when American

QUESTION:
I am moving to Canada next month for new job. We are selling a property in
the US that was a primary residence (so we get a break on capital gains
tax).
If it sells in 2005 and I am paying taxes in Canada for that year, will I
get hit with a stiff tax for the profits?
-------------------------------------------------
david ingram replies:
Only if it goes up in value "after" you come to Canada.
When you enter Canada all assets you own are valued on that date.
If you bought a stock for $10,000 and it is now worth $8,000, that is the
value you will use for Canadian Capital Gains Tax. If you bought a stock for
$4,000  and it is now worth $10,000
If you come across the border and your house is worth $300,000 and you sell
it three months later for $300,000, there will be no Canadian Tax.
If you come across the border and the house is worth $500,000 and you sell
it for  $550,000 six months later and are renting in Canada, the house would
be tax free as it was and had been your personal principal residence.
If you come across the border and the house is worth $400,000 and you do not
sell it for a year and the market turns and you get $500,000 (out of the
blue), if you have bought another house in Canada, you would owe tax on the
US house (about $24,000) or you could elect to call it your personal
residence and still claim it tax free but you would have a possible tax debt
on the one you are living in (for that time period).
This office, of course, specializes in US / Canadian transborder moves.  We
would be happy to prepare your first Canadian returns and can do the US and
state returns as well.  You can deal with us by email, snail mail, fax,
courier and post office.
-----------
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