My question is: Applicable to both US and Canada
QUESTION: My husband and I, US citizens living in the US and both
professors, have been offered jobs at a university in BC and want to accept.
We want to be wise about our move, which would likely be permanent until
retirement in 10-11 years (returning then to US). We plan to sell our home
in the US, worth about $500,000 US, and buy a home in the Vancouver area. At
retirement, presumably we would sell the home in BC and return to the US,
buying a home here again. What do we need to know or take into account in
terms of taxes, deductions, capital gains, etc.?
Thanks!
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david ingram replies:
You need to know a lot but there will not be any great problems.
What you need is a consultation and for that I charge but basically, you
will not have a lot of problems. Many have come and gone before you.
However, IF you intend to return to any area in the US, I recommend that you
buy your retirement home NOW where you wish to settle.
AND, to get your mortgage deductible for Canadian Tax purposes, you want to
sell the present home tax free and bring ALL your money to buy the house in
Vancouver. When it is paid for, then you can put a new mortgage on it to
buy the house in The US. Another wrinkle is that you want to buy the US
house BEFORE you physically move to Canada. That way, if you leave BEFORE
ten years of residence in Canada, the US house is not taxable in Canada.
A little tricky. When leaving Canada, we have a departure tax so a US house
in Memphis or San Francisco or Denver is deemed sold when you leave and you
have to pay tax to Canada on the deemed profit even though you have not sold
it and it is not even in Canada.
Why do you want to buy it now.
Well, you are moving to another country. The US dollar has declined 30%
relative to the Canadian Dollar in the last year.
As an example. My neighbours house was worth $500,000 2 years ago and the
US dollar was worth $1.50 Canadian. You could have bought that house for
about $333,333.33 US.
Today, the neighbours house is worth $650,000 Canadian and the US dollar is
only worth $1.30 Canadian and you need $500,000 US to buy the same house.
The combination of price increase and the declining dollar have exaggerated
the costs.
If the US dollar goes back up to 1.5 and the Canadian house does not
increase in value as much as real estate in the area you want to be, you
could well be priced out of the market. It is a situation I see all the
time.
You can learn a little more about what you will have to do by going to
www.centa.com and reading the US / Canada Taxation section on the right hand
side.
Answers to this and other similar questions can be obtained free on Air
every Sunday morning.
Every Sunday at 9:00 AM on 600AM in Vancouver, Fred Snyder of Dundee Wealth
Management and I, David Ingram host a LIVE talk show called "ITS YOUR
MONEY"
Those outside of the Lower Mainland will be able to listen on the internet
at
www.600AM.com <http://www.600am.com/>
Local calls are taken at (604) 280-0600 and Long Distance calls are taken at
1( 866) 778-0600
Callers to the show are invited to attend free seminars on financial
planning with such specialities as deductible mortgage interest. They are
held at Fred Snyder's Office at 1764 West 7th in Vancouver - (604) 731-8900
for more information.
=========================================
David Ingram's US/Canada Services
US / Canada / Mexico tax, Immigration and working Visa Specialists
US / Canada Real Estate Specialists
4466 Prospect Road
North Vancouver, BC, CANADA, V7N 3L7
Res (604) 980-3578 Cell (604) 657-8451
(604) 980-0321 Fax (604) 980-0325
Email to taxman at centa.com <mailto:taxman at centa.com>
www.centa.com <http://www.centa.com> www.david-ingram.com
<http://www.david-ingram.com/>
Disclaimer: This question has been answered without detailed information or
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