Advice. Pre-construction condo and residential-tie

madma
New Member



Joined: 02 Sep 2008
Posts: 1

Posted: Tue Sep 02, 2008 4:25 pm

 

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Hi,

About a year ago I signed the purchase agreement of a pre-construction condo which won't be finished until 2011. However I'm now considering moving down south for a new job. Does anyone know if this condo would be considered by CRA my residential tie to Canada? Are there any ways to transfer this purchase agreement to a different person (e.g. a relative)? Have anyone been in this situation before?

Thanks. I'm glad I found this forum. Hope you can give me some advises.

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Steven
CanuckAbroad VIP



Joined: 28 Sep 2007
Posts: 1587
Location: Calgary

Posted: Wed Sep 03, 2008 10:50 am

 

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It is a residential tie, but on the other hand non-residents can possess Canadian real estate. The main difference is that if it's not your principal residence it becomes subject to capital gains tax and you are not eligible to claim the GST rebate for a new home.

It also depends on whether you actually want to move your tax home to the US, you don't have to, you can carry on filing in Canada and file in the US as a non-resident and claim a foreign tax credit for the income tax you pay in the US. Obviously you will pay more tax usually doing it that way (as the rates are higher in Canada plus you will pay US social security taxes which is higher than CPP) but it does save a lot of paperwork.

Depends on how long you plan on being in the US, what your income will be, etc.

A lot of people seem to get wound up about the "substantial presence" test, but on the US end it's pretty easy to get out of if you file the right forms. Theoretically you could stay in the US forever as long you don't get permanent resident status and file non-resident forever, although the IRS get twitchy about it if you do it for too long.

Have a read of: http://www.cra-arc.gc.ca/E/pub/tg/p151/

And also IRS publication 519, and the CRA guide on capital gains tax, and also form NR-73.
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Steve.

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