Author Topic: Advice on selling Canadian house  (Read 236 times)

CaninFL

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Advice on selling Canadian house
« on: November 17, 2018, 11:47:56 AM »
Hello,

I am a Canadian Citizen (Green Card) living in Florida, I am wondering if anyone has insight on timing of selling a House in Canada (Manitoba). I have been a US resident for tax purposes for 2 years and do not expect to move back to Canada for at least 5 years, and likely longer. The home is currently being rented but I still have to put about 5K towards insurance/tax etc per year.


With the current exchange rate does it make sense to put as many dollars as I can on the mortgage (3.5%) how does this compare to possible tax consequesces of selling in 1 year or 5 years down the road?

When is the best time to dispose of the house if market allows (in Oil and Gas country so things haven't been great market wise)


Cheers, and thanks in advance.

Phil Hogan, CPA, CA, CPA (Colorado)

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Re: Advice on selling Canadian house
« Reply #1 on: November 18, 2018, 01:36:43 PM »
Hi Canin

That's not a very easy question to answer based on all the possible outcomes. If we could predict the direction of the foreign exchange market it would be much easier.

From a financial perspective paying off your mortgage while you are earning US dollars is not a bad plan.

The difference in overall tax resulting from a sale as non-resident of Canada versus selling when you become a Canadian resident will be based on a few key considerations:

- what is the current gain on the property
- what state are you living in?
- what will your income be while in Canada compared to what it is now?
- do you actually want to sell the property, or would you rather hold it long term
- do you anticipate rolling the property to a spouse in the future tax free?

If we new the answer to some of these questions we could get a better idea of what would make sense.

Phil
Phil Hogan, CPA, CA, CPA (Colorado)
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Hutcheson.ca
phil@hutcheson.ca
* The information contained in these posts should not be construed as professional advice and is for informational purposes onl

CaninFL

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Re: Advice on selling Canadian house
« Reply #2 on: November 18, 2018, 05:17:40 PM »
Thanks Phil,

Home was purchased in Sept '13 for 310K  Maybe 15K in improvements,  Owe 257, could maybe sell for 290-300 today so tax shouldn't be too bad.  To your point about forex, agreed though considering current rates it seems upside is high and how much lower can CAD go?

Living in Florida now and for foreseeable future. I would like to sell ASAP/the market will allow, and build something here (I'm a Contractor) renting now in FL and rent is going UP - though if the tax implications and any other difficulties indicate that doesn't make sense, willing to hold as an investment. We bought in Manitoba at the top of the market and I don't want to repeat that mistake here - things have been steadily improving here since 09 ish, but in the last few months a little market dip or a least a pause.

We moved here from a rural area in Manitoba to better access Disability Services for my son (Living in West Manitoba it is 2.5hrs+ plus for anything not available in Brandon.) So freeing up money for misc would be helpful, but I am willing to rent it out for a while to avoid losing down payment and any other dollars we've put in the house.

USD was worth 1.03 CAD at purchase which made me start thinking about taking advantage of current rates. Basically trying to avoid paying 2k ish in rent here while also having to direct money at taxes and insurance in Canada, when I could build a nice home here for less monthly total costs.

Wife is a US Citizen and has a Canadian Work Permit which will be expiring as our time here grows. I am not familiar with "rolling" the property but am open to anything!

I do not foresee any Canadian income in the next 5ish yrs apart from rental income which is a wash at best along with growth on LIRA, RRSP, RESP and RDSP (about 100K total). I'm set up as an S Corp here, income about 100K (single income).

Thank you!