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I am moving to US for work for 3-4 years, however my wife plans to continue to stay in Canada. We own a house in Canada, and I plan to rent in US. Based on some research, I realized I will be treated a factual tax resident of Canada due to significant personal and financial ties to Canada.
a. Will I be able to continue to invest in RRSPs to lower my Canadian tax (my US employer has 401k plan)?
b. Will I pay any capital gains tax on house if my wife and I decide to sell the house while I am in US? House is co-owned and it is our primary residence currently.
Hi Ankit,
Thank you for your questions. Yes, you will remain a factual resident of Canada and you will be liable for Canadian income tax on your worldwide income. You can claim a foreign tax credit on your Canadian tax return for the American taxes paid. You can continue to invest / contribute to your RRSP to lower your Canadian tax bill. 401K contributions made will reduce your RRSP limit. You will not pay capital gains tax in the US on the sale of your Canadian real estate, because you are a non-resident alien of the US.