Selling vs Renting US home before moving to Canada

[Thinkin]

I need to move to Canada in a couple of months if I need to maintain my Canadian PR status. I currently own a home in the US. I realize that if I sell the house before moving to Canada, I don't have to pay taxes in the US on gain up to $500,000 (married), and don't need to worry about FIRPTA and property depreciation that would further increase US gain in future.

At the same time I see Canadians wanting to own a home in the US, so there must be some advantage to own a home in the US I guess. Since I already have a home in the US and feel I got a good deal on it, was wondering is it worth keeping it and renting it out while I am in Canada. Also, the rental income I estimate should be close to/ cover the mortgage + property tax payment. I also read something about US withholding 30% of the gross rent if I don't opt for the "net rental election" while paying taxes in US. I am still learning about these things in the last moment, and gross rent 30% rent withholding is too much to pay. However, seems like if I go with "net rental election" for US tax payment, may not be that bad to rent the house while in Canada. I am very confused and what ever I decide (i.e. sell vs rent) has to be fast. Appreciate any thoughts or word of advice. If I am missing something I have not thought about please let me know.

 

[Mthornt]

We're in a similar position, no where near the border however. I'd be interested to know what you decide to do, my wife wants to sell, but I've got tons of Canadians who live in my neighborhood now (Arizona is popular with Canadians in the winter) and I'm unsure if that's the best idea.

 

[smallwhale]

Xact same situation here.
Selling the home before moving will be very messy for me (as I have to find some temporary accommodation).
However, it will be a tax-free event for me as $500K will non-taxable under US law. But if I sell it after moving to Canada, then I am not sure what will be Canadian share of taxes on the gain ? SOmewhere I read that Canada will tax the difference between the selling price and the fair market value of the home on the day one becomes the Canadian resident for the tax purposes. That will not be that bad either if I can sell it quickly after moving to Canada. The only glitch is if me and my wife has to come to US to sign any paperwork in order to sell the property.

Putting the property for rent is a good option as well (provided the rent market keeps up). Also, in order to get the tax-free sale of property one has to reside in the property for for 2 years out of last 5 years.

 

[vensak]

Xact same situation here.
Selling the home before moving will be very messy for me (as I have to find some temporary accommodation).
However, it will be a tax-free event for me as $500K will non-taxable under US law. But if I sell it after moving to Canada, then I am not sure what will be Canadian share of taxes on the gain ? SOmewhere I read that Canada will tax the difference between the selling price and the fair market value of the home on the day one becomes the Canadian resident for the tax purposes. That will not be that bad either if I can sell it quickly after moving to Canada. The only glitch is if me and my wife has to come to US to sign any paperwork in order to sell the property.

Putting the property for rent is a good option as well (provided the rent market keeps up). Also, in order to get the tax-free sale of property one has to reside in the property for for 2 years out of last 5 years.

Does US have any treaty or agreement with Canada to prevent double taxation on the property? If not and you will become Canada PR resident, then you will be taxed of such income. You will be also taxed from the renting income as well.

 

[knowledge101]

Same situation here. Just make sure you research ALL the costs including out-of-state property taxes, landlord home insurance, etc. For us its worth renting out but just barely. We are going to do it for a few years because property values haven't picked up in our area and because we got a great 30 year fixed mortgage at 3.25% on the home so no sense in selling it now. We are considering a property management company but that will make our margins a bit tight. Don't forget to include capital expenditures, property maintenance, and vacancy expenses. For us those will equate to $250-$300/month on top of all the other expenses that we will need to reserve from what we rent it out for and put it into a savings account just for those expenses.

Not concerned about tax situation to be honest. For us it makes more sense to rent right now.

 

[Snowisland]

I was in Canada when my copr came. I had a friend house sitting for me in Texas. My husband and I flew to Texas, spent one week removing all paperwork from the house, selected what we wanted to ship, which was five large boxes, cost 500.00 total. Got the cats checked by the vet, I had a dentist appointment and eye exam, Emptied the fridge, removed the cat litter box, took the cats and my car and drove six days, with overnights in hotels to land at Couttes on the way, and made it to our home in Canada.

Once we left Texas, a friend had a few days to remove anything they wanted from our house. Then the realtor went in, met the people from a Crisis Center at my house, packed and removed everything in four hours, donated the items to the thrift shop they use to make money , donated the food in the pantry to a food pantry, donated cat beds and toys to an animal shelter. I did not even have to tidy the house before we left.

The next day the realtor met maid service at the house, they next day Sears carpet cleaners, that night a photographer and the house was on the market the same night. It sold in a few weeks. Closing was done by using legal notary and fed ex the paperwork to the title company.

Because there was no time to have yard sales or list furniture online and I didn't want to do it alone, we donated it all. My husband had three weeks off work, so not enough time to do more.

I am telling you all this info because it took a long time for me to figure out how to get the house empty and sell it without spending time away from my husband and how the heck was I gonna drive that far with two cats by myself?

We discussed renting out the house but I didn't want to because of stress and what I had seen renters do in several cases even with management companies.

We had the money from the sale wired to our RBC American savings. When the Feds hiked the interest rates we moved the money over to the RBC Canadian checking. The exchange rate gave us a significant amount of money.

Sorry for the long post. Just sharing an option you may not have known existed.