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harveyxoxo

Selling property after leaving Canada

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Hopefully this is the correct forum/category.

I left Canada in 2016, got a US green card and snagged an awesome 2 year contract job. My plan was that it would only be temporary, and I’d return to Canada after my contract was up in the 2 years. As such, I left my house, my furniture, bank accounts and credit cards all open. Based on a discussion I had with CRA at the time, I thought I was still considered a resident of Canada, submitted my taxes every year and claimed my world wide income AND paid taxes in Canada on top of what I paid in the US based on the results from my tax software. 
In mid 2018, I was offered a full time position and decided this is was the right move for me, so I sold my house in Canada. Thinking I was still considered a resident, I did not claim that I was a non-resident. I used an address for a cottage I own in northern Ontario as my address. I had changed my address to this with CRA when I initially left Canada, because the other house sat vacant. This address forwarded to my parents, so if anything important or time sensitive came up, they could let me know.
Here’s where things get messy. I got a letter from CRA saying that I wasn’t a resident, and they charged me back for the majority of the refund I got on my 2016 return, and all my TFSA income. They are stating that *I* submitted documents requesting that my residency status be changed (I didn’t). I requested that they reverse this – I got a letter last week saying that they are declining that decision as my emigration date is recorded as 2016.
So, apparently, getting a green card nullifies your Canadian Residency status. Now I’m stuck scratching my head and wondering what the heck I am going to do. If I was considered a non-resident in 2016, and sold my principal residence in Canada in 2018, does that mean I owe the 25% non-resident taxes? We’re talking about $100,000 here. That’s more than the capital gains I made on the property, and I can’t come up with that. CRA has not asked for anything else yet – I am going to redo my 2017 taxes and get my $500 back that I paid out based on worldwide income…but waiting for them to actually ask for something and look into my 2018 taxes to and see  if I sold property just feels like waiting for the other shoe to drop.
Does anyone have any similar experiences, or advice?   

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According to U.S. law, you can be a citizen of the U.S. and of another country or other countries. You can have a "second citizenship". ... Of course, you should also look to your own country's law, to see if that country will allow you to keep dual citizenship.Canada and the U.K. allow dual citizenship.

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CRA is right. The second you became US Permanent resident you were no longer Canadian resident. You can't be a resident of both places and they do go after Canadians all the time for this.

 

They actually count the day you crossed the border as the first day you were no longer a Canadian resident. 

 

I sold my house about a month before I left for this main reason.  As for the taxes owed to CRA I'll let other who know more for that. 

 


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I suggest finding an accountant to help you navigate the CRA.  We also made sure to sell house before my husband left Canada to avoid that...and since it was my last permanent address in Canada, it was considered our primary residence when we sold it.

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And as we learned the hard way selling a house after becoming a US resident (via O1), there may be taxes due to the IRS on the sale of the home due to gains from currency fluctuation. You need a team of accountants with cross-border experience. We like GTN. 

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We also sold before entering on our IR5 visas .. and we cashed out every asset that was tax free in Australia but taxable in the US as well .... like retirement accounts etc. All that we transferred was therefore existing savings , and in cash before the date we entered. Our action was to avoid the very issue you have encountered. 😢sorry it has caught you . 

Edited by Lil bear

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I wanted to thank everyone for their replies! After emailing multiple accountants, one finally replied. We have a phone meeting set up for Tuesday. Based on SunnyTiger's comment, I did some more digging. I'm hoping I can have the house claimed as a principal residence for all the years I owned it, minus the 1.5 half tax years I didn't live there. If I can, that brings my projected tax obligation from 100k "ish" to 10k "ish". Much more manageable. I will keep my fingers crossed.  

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