Hi, I recently moved to Canada from the US and I own a rental property in the US. I bought the rental property in the US before moving to Canada. I hold a H-1B visa and commute to the US to work 2 days a week. My question is, can I continue to rent the property and collect rent in my US bank account given that I will be non-resident in the US? Anyone in Canada owing a rental property in the US ?
Owing a rental property in the US while living in Canada
- Thread starter ThePRguy
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I am also interested in knowing this.
If you cross enough days, won't you remain a resident for tax purposes?
If you cross enough days, won't you remain a resident for tax purposes?
Yes, you can own a rental property in US while being a PR in Canada.
When filing taxes in US, depending on the year you moved in and depending on when are filing the taxes, you might be considered a US tax resident or a non-resident since IRS take 3 previous years into account for calculation of tax residency. I believe travelling to US for work and returning on the same day does not count towards US IRS residency for tax purposes.
On the Canada CRA taxes, they tax you on all international income. If you sell the property, you are also liable for any profit with purchase price being the property value the day you landed in Canada as PR.
When filing taxes in US, depending on the year you moved in and depending on when are filing the taxes, you might be considered a US tax resident or a non-resident since IRS take 3 previous years into account for calculation of tax residency. I believe travelling to US for work and returning on the same day does not count towards US IRS residency for tax purposes.
On the Canada CRA taxes, they tax you on all international income. If you sell the property, you are also liable for any profit with purchase price being the property value the day you landed in Canada as PR.
Thank you nvap23. I am aware of the substantial presence test. I usually drive in the morning and return next day in the evening each week. I moved recently so for the tax year 2022 and 2023 I can file as a US resident but for 2024 that may not be the case. How many days does IRS counts? Are there any guidelines or ways to establish that? Like in Canada even part of a day spent in Canada counts as full day towards residency obligation. Is there anything like that for the US especially for tax purposes?
Oh wow I did not know this. If traveling to work and returning doesn't count towards US residency for tax purposes, I'll be screwed. I think as a NR you don't get the deductions and have to pay a higher tax rate on rental income too IIRC
Below is per IRS guidelines for residency test:
You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least:
31 days during the current year, and
183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
All the days you were present in the current year, and
1/3 of the days you were present in the first year before the current year, and
1/6 of the days you were present in the second year before the current year.
You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least:
31 days during the current year, and
183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
All the days you were present in the current year, and
1/3 of the days you were present in the first year before the current year, and
1/6 of the days you were present in the second year before the current year.
Days of Presence in the United States
You are treated as present in the U.S. on any day you are physically present in the country, at any time during the day. However, there are exceptions to this rule. Do not count the following as days of presence in the U.S. for the substantial presence test:
Days you commute to work in the U.S. from a residence in Canada or Mexico if you regularly commute from Canada or Mexico.
Days you are in the U.S. for less than 24 hours, when you are in transit between two places outside the United States.
Days you are in the U.S. as a crew member of a foreign vessel.
Days you are unable to leave the U.S. because of a medical condition that develops while you are in the United States.
Days you are an exempt individual (see below).
Thanks this definitely seems problematic to meet the second year, should be fine the first year (2023 for me).
I wonder how an arrive on Tuesday morning, leave on Thursday night would be treated. Given I will have an address in the US and spend the night there once a week/couple-times-month, would that still be treated as commuting from Canada?
Do you know if this is counted as NR or Resident? i was in US straight for 21 days and also used to commute to work and stayed there for 2 or 3 days and come back. Probably that would count as 31 or more days as well and I have moved to Canada only in Oct 2020 from US(been living in US for a while though). So for 2021 should i be filing 1040 or 1040NR?
I see, did you meet the IRS presence test to qualify as resident for USA/IRS for all years?
I am wondering what will happen to my US taxes if I don't meet residency requirements for 2024.
You then have to file 1040-NR. After 2020 i have been filing 1040-NR for USA.