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Hi Allan,
I am a Canadian citizen residing in US and am a US resident (Canadian non-resident). I have USD account in TD where I have 15K USD. I would like to convert this amount into CAD and use it to pay off my mortgage loan. Could you please advise
(1) Would you advise to do the conversion to pay off the mortgage?
(2) Should I convert the whole amount as lump-sum or in batches?
(3) Would I have to pay tax on the conversion to either CRA or to IRS?
Looking at the CAD vs USD, I won't be benefitting much but since it is the only source of funds that I have, so would like to use them.
Thank you very much for your guidance.
Hi, if the interest that you are earning on your cash savings is less than the interest that you are paying on your mortgage, then use your cash savings to pay off your mortgage. Any foreign exchange gain realized upon conversion of the USD into CAD will be taxable to you in the US. To determine the exchange gain / loss, compare the exchange rate at the time the funds were purchased in USD to the exchange rate at the time the funds are converted into CAD. I would convert the entire amount in one go and pay down my mortgage, rather than in batches, to lower my mortgage interest expense.