capital gain tax on personal residence when leaving - T1161, T1243 T1244 - T2062 T2062A -

Hi David,

I have a few questions with respect to selling a principal residence in Toronto, ON. My friends are selling their detached house and relocating to Germany this year. Is there capital gain tax applicable on such a situation? Since they will no longer be residents of Ontario next year, are they still required to file a Canadian Income Tax next year and declare the gain they will receive when selling their property?

And second question, same situation, but for ourselves, if moving to the States next year.

Thank you for your response.

david ingram replies:

In the year that one leaves Canada to live in Germany, Australia, Panama, the United States or any other of the approximately 254 countries out there, that person must fill in a departing Canada tax return which will include:
*    form T1161 - (List of properties by emigrant)

 and maybe T1243  - (Deemed Disposition of a Property by an Emigrant)


if there was any capital property which caused a capital gains tax to be paid on a deemed disposal.

Your friends moving to Germany may have tax on other items they own such as mutual funds or a stock portfolio but in the normal course of events will not have to pay capital gains tax because the house you live in is usually your principal residence and its sale is tax free as long as they are a resident of Canada.

If they have left Canada before they actually sell the house, they will likely run into a paperwork tangle and have to file forms T2062   - ( REQUEST BY A NON-RESIDENT OF CANADA FOR A CERTIFICATE OF COMPLIANCE RELATED TO THE DISPOSITION OF TAXABLE CANADIAN PROPERTY)  and a

T2062A - (Request by a Non-resident of Canada for a Certificate of Compliance Related to the Disposition of Canadian Resource or Timber Resource Property, Canadian Real Property (Other Than Capital Property), or Depreciable Taxable Canadian Property )

These two forms are filled out to stop the purchaser having to withhold 25% of the gross sale price and remit it to the CRA.

The same situation applies to you  in your move to the USA.

these other questions may assist you as well

Hi David,

I am in the US for a 6 month contract making $72/h in Boston, MA.

I understand that for CCRA I am a "resident" even if I stay here for more
than 6 mo (I own a house in Toronto, have an RRSP).

I am here on a 1099. How can I minimize the amount of tax paid in the US
and Canada? A co-worker told me that I have to pay tax quarterly in the US
and I want to deduct my rent and utilities.

What is your fee for filing my taxes at the end of the year?


david ingram replies:

The # 1 rule for a TN is that you can NOT be self-employed for the purposes of US Immigration.

Income Tax Does allow you to deduct necessary expenses but from your description, your rent and utilities would not be deductible because it seems that you moved to Boston to take the job.  If you were already working in New York and your New York Employer sent you to Boston for six months and you kept your home in New York, then temporary expenses for up to a year are deductible. 

However, in the case you describe, You may be living in Toronto but you took a job in Boston working for whomever obtained your TN for you.  By paying you on a 1099, that employer has saved themselves about 10% in payroll expenses because they are not paying FICA, Medicare, Employment Insurance and other benefits.

You are actually "BY LAW"  an employee without benefits.  If you chose to be paid on a 1099 basis, you have likely cost yourself a lot of money unless your employer grossed up your pay by what they would usually have to pay for payroll benefits.

Remember, your TN visa only allows you to work for 'that' employer.

If you wanted to do something for someone else, you would have to get another TN visa for that company.  It is possible to have half a dozen TN visas at the same time but you ARE an EMPLOYEE of each one.

This will NOT be what you want to hear. 

In the meantime, you will have to file a 1040 DUAL Status return with a schedule C and pay both halves of the FICA as well as Federal Tax and MA state tax and Boston.
At the moment, I am quoting $900 to $3,000 - You can find a better understanding of my pricing further down.

Are you sure you are not the person who wrote this other question?


I have been working for a US employer with TN visa for more than a year. Now I just registered my only small business in Boston area and will have my first customer for consulting service.

1. --Am I illegal to work as self employed while keeping my TN status by working with my employer?
2. --Do I need a work authorization for me to work for myself since I know I have to have a specific TN visa for every and each employer.
3. --If the aboves do not work, do I have an alternative way to continue my business while working and living in US under TN status, such as doing the self employed business using my company registered in Ontario Canada?

Your answers are appreciated.

david ingram replies;

1.    What you have set up is totally illegal and will provide Homeland Security with wonderful documentary evidence that you were working illegally when someone complains and Homeland Security is arresting you prior to deporting you.

2.    Yes, you need an E2 or E5 visa if you want to work for yourself.  The E-5 requires a $500,000 to $1,000,000 investment and you have to create jobs for and hire 10 full time employees who are NOT related to you.  Its advantage is that it gives you an instant green card.  The E-2 requires a much smaller investment (maybe as low as $35,000) but has the disadvantage that one of the terms is that you can NOT get a green card with it.

3.   Not with a Canadian company if you are working in the US. AND, if you have a Canadian corporation, be aware that you need to file US form 5471 when a taxable resident of the US with 10% or more ownership of a foreign company in any country, Canada, China, India, Pakistan, Spain, etc, etc.  Look up the form AND instructions at  read the penalty for failure to file in the instructions.

4.   However, all is not lost.  You CAN have MORE than one TN as you seem to realize.  I have seen eight issued in the same year for the same person for eight different US employers for consulting and or engineering jobs.  However, you MUST be an employee (part time is fine) of each person  paying you because one of the terms of the TN visa is that you can NOT be self employed.  And, a;though it seems a contradiction, you can be paid on a 1099 basis which just means that you are an employee without benefits.

david ingram's US / Canada Services
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pert  US Canada Canadian American  Mexican Income Tax  service and help.
David Ingram gives expert income tax service & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.
Phone consultations are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. ($472.50 with GST for in person or if you are on the telephone in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.

$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
$1,200 would be the same with one rental
$1,300 would be the same with one business no rental
$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above and you moved in and out of the country.
This is just a guideline for US / Canadian returns
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
A Business for $400 - Rental and business likely $550 to $700
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up.
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
8891 forms are generally $50.00 to $100.00 each.
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files.  As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files.  It can take us a valuable hour or more  to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.

IRS Circular 230 Disclosure:  To ensure compliance with requirements imposed by the IRS, please be advised that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.--

Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist for expert help, assistance, preparation, or consultation  in connection with personal or business affairs such as at or  If you forward this message, this disclaimer must be included." -



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