Fair market value for deemed disposition of property

[mchen]

Hi, I've recently moved to the US but still own a home in Toronto. If I wanted to rent this out instead of selling but I've lived in it as my principal residence, how much capital gains tax would I have to pay upon sale of this property? Would it be on the entire amount of capital gains since I purchased the home? How does the principal residence exemption factor into calculating the capital gains tax?

I've read something about deemed disposition of assets when claiming non-residency from Canada. So if I need to fair market value the home for purposes of calculating an amount to claim while it was my principal residence, what are valid documents I could use to prove market value? Would my assessed value from property tax statements the year I left be sufficient?

I know these are a lot of questions to ask but I'm hoping somebody else has been in a similar situation and knows some of the implications for tax planning. Also, the CRA website is not very helpful when it comes to valid documents to use in determining fair value.

Thanks in advance for your advice!

[Steven]

The question is whether you are absolutely certain that you are going to remain a non-resident of Canada as a residence is a residential tie, so you need to do an NR-73 first before worrying about the exit tax. There is an exemption from the exit tax, i.e. if you have been resident in Canada for less than 5 years.

If the CRA thinks you are non-resident, then worry about the deemed value and how much capital gains they might hit you up for.

Obviously the lower the value you can get away with the lower the tax, so assessed value for tax purposes would be the best one.

Have a chat with the non-residents dept. in Ottawa.

[mchen]

Thanks Steve. I called the international tax office and they advised that the value assessed for property taxes were not sufficient and that I should get a real estate appraisal.

Also from what I've read, I should prepare my NR73 but need not submit it. Since I've purchased a home here in the US, relocated my family and personal belongings, I believe I have severed most of my ties with Canada and established closer ties to the US. Since I was able to pass the substantial presence test in the US, I also submitted taxes as a US resident. I do need to maintain some bank accounts to handle payment of bills and mortgage etc for my property in Canada - would this cause a significant problem?

Thanks again for your advice.