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Name: dxxx
My question is: Applicable to both US and Canada
QUESTION: Question pertains to Canadian citizens moving to the US. We are
home owners in South Surrey with 2 rental duplexes in the interior of BC and
have plans to transfer to the US in year on a L1 visa. The intent is also
to obtain a green card while on the L1 and become permanent residents. Can
we sell our primary residence after moving to the US and still get the tax
free exemption? Can the primary house be rented out for a short time (6
months) before selling and still obtain the tax free exemption. Also will
there be a problem be a cdn citizen and a permanent US resident and holding
cdn rental properties?
Thanks,
Dxxx
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David Ingram replies:
The only capital item that can achieve a new value when crossing the border
for tax purposes is your family house. All other items, mutual funds,
RRSPs, cabins, rental homes, classic cars, etc will maintain their original
value for tax purposes when you cross the border.
So, if your residence was worth $300,000 when you crossed the border and you
sold it for $310,000 (forget about exchange rates here please) you would owe
tax to Canada first on the $10,000 and the US second. After paying the
Canadian tax, you would claim a foreign tax credit on form 1116 of your US
1040 return.
The rental houses are another problem. If you paid $100,000 and sold them
for $200,000 (more likely $40,000 and $50,000 if in the interior) you would
use the original purchase price in both countries.
Same procedure for the foreign tax credit.
As a US resident, you will have to have a Canadian Agent represent you for
the purposes of your Canadian Section 216(4) tax return. You have to make a
projection of the expected rent and the agent has to remit 25% of the gross
rent or 25% of the net rent (if approved) to the CCRA (Canadian Customs and
Revenue Agency) every month. Your Canadian returns (assuming you and your
wife both own the properties) have to be filed by June 30th of the following
year.
If you do not file the returns, your Canadian Agent is liable for your
income tax. Both you and your agent need to file and sign a Canadian Form
NR-6 (attached)
david ingram - [email protected] <mailto:[email protected]>
David Ingram and Associates Realty Inc
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 913-9133 - (604) 913-9123 www.centa.com <http://www.centa.com>
Cell is (604) 657-8451 (10 AM to 10 PM seven days a week)
US / CANADA / MEXICO
Working Visa and Income Tax Specialists
Be ALERT, the world needs more "lerts"
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