Leasing home while non-resident

We are planning to move to Dubai for several years for work and will become non-residents while away. We understand that we have to fill in the CRA Form T1161 as we will not sell our principal residence, and then do a T4055 upon return. My question is that since we will not sell our house, and our adult children will continue to live there, will this hurt our non-resident status. Should we do a long term lease to them, or through a third party agent?

You will not be allowed to be non-resident becuase of having either an emplty of non-arm's length tenant (your child).

It simply does not matter how you set this up. You will still be resident, unless you either sell the house, or lease it to a stranger at market rate.
If you were moving to a country which had a tax treaty with Canada that allows you to be considered resident of dubai, this would be fine, but there is no such provision.

Firstly, I will be considered a resident of the UAE if I move to Dubai, so hopefully that would cure the problem.

Secondly, would I be allowed to lease to a third party at market rates, and in turn they lease to our children?

While you might be treated as resident of UAE, since you still have a residential tie in canada, the treaty -- unless you are " a national of the United Arab Emirates" -- does not recognize you as a tax resident of UAE, Canada will not 'release" you from worldwide tax obligation.

That is a problem with most Middle-eastern treaties, and is a known problem:
http://www.cramagazine.com/issues/Winte ... icle02.htm

So unless you are a UAE citizen, you will not break tax residency in canada unless and until you sell your home or lease it to someon other than your family. CRA will see through the leasing arrangement. Also, they will view such an arrangement as clear intent to return to canada, another factor in determining residency.

You need to seel the house to your family, if you really want to keep it.


Follow -up on this with me at forums.serbinski.com.