Tax Advice? Living in US while owning property in Canada

Wordbird
New Member



Joined: 18 Mar 2008
Posts: 3
Location: Chicago

Posted: Tue Mar 18, 2008 3:00 pm

 

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Hi! Upon moving to the US, did most of you here sell your property and cash out your RRSPs, before declaring yourself a non-resident?

I'm a Canadian who just eloped and married my US citizen husband. I still have a condo in Toronto that will be finished being built in October (bought pre-construction), as well as bank accounts, credit cards and RRSPs.

I haven't been earning an income since May, when I quit my job to work on my book (I'm a writer) and it looks like I won't be legal to work here in the US for another 3 - 6 months, at least.

Is it necessarily advantageous to apply for non-resident status if I'm not earning a salary? And if I do so, is it better to take out my RRSPs and sell my condo before I do, to avoid the non-resident with-holding tax of 25%?

Any advice or referrals to a tax specialist who is familiar with Canadian tax laws in the greater Chicago area would be greatly appreciated!

Thanks much! I'm new and so pardon if this is a question that's already been posted, but I did searches and nothing really came up for me.

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Steven
CanuckAbroad VIP



Joined: 28 Sep 2007
Posts: 739
Location: Calgary

Posted: Tue Mar 18, 2008 9:31 pm

 

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There was a similar question a few days ago, have a search for it on here regards the RRSPs, basically you don't need to cash them out but once you are US resident it is a bad idea to continue to contribute to them.

If you are leaving to reside permanently in the US (i.e. you have applied for permanent residency status) you MUST pay US income tax as the tax treaty does not apply. This means you must become non-resident from Canada, which means for the CRA not to come after you, you must sever all ties, i.e. change your DL, get rid of your health card, have no address in Canada, etc. (you can have a Canadian bank account but it must be under a US address and you must pay Part XIII non-resident witholding tax on any interest, which is a flat 10%).

Also you may be subject to the "exit tax", which is another way Canada tries to stop you leaving, read about it on the CRA non-residents website.

Read this also: http://www.cra-arc.gc.ca/E/pub/tg/p151/README.html

Having a condo in Toronto does complicate things. Technically if you were a US resident who just happened to have a holiday home in Canada it wouldn't be a problem, but given that you are a Canadian who only just left it makes it appear as though you are still resident. CRA may consider that a "residential tie" for tax purposes, especially if you actually spend time there during the year.

So yeah, I'd find a good cross-border accountant if I were you.
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Steve.

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Reba
Moderator


Canuck in NC

Joined: 16 Jul 2004
Posts: 967
Location: North Carolina

Posted: Wed Mar 19, 2008 3:08 am

 

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There is an accounting firm called Serbinski that does cross border tax issues. Google them. I've heard mixed reviews of their services, but they also have a message forum so you may be able to find some info at least.
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Wordbird
New Member



Joined: 18 Mar 2008
Posts: 3
Location: Chicago

Posted: Wed Mar 19, 2008 5:57 am

 

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Thanks, Steven and Reba, for your replies.

I saw the posting on RRSPs (I had maxed out my RRSPs last year when I sold my previous place) but wondered if it makes sense just to cash them out.

I will look through Serbinski forum - I've come across the website before in my google searches but hadn't looked through the forum.

Thanks, again!

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