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My husband and I co-own a house in Canada and are planning to move to India in 2026 from Canada. We have our Canadian citizenship and the house is our primary residence currently. If I move to India on a job offer starting from Jan 2026 but my husband continue to live in our house with my son and we are planning to sell the house by May 2026, will my status change to a non resident and will that impact the tax on my house sale. Also during the period between Jan to May, can my husband keep our home in Canada locked and come stay with me in India but not work there. Will this change his resident status and will that impact the tax on the sale? Also what are the tax implications in retaining rrsp and tfsa accounts as a non resident.
Thank you for your question. This is a common situation for Canadians moving abroad, and I’ll summarize the key tax considerations below.
1. Residency Status
Residency for Canadian tax purposes is determined by your residential ties (home, spouse, dependents, driver’s license, bank accounts, etc.).
- If you move to India in January 2026 for work while your husband and son remain in your Canadian home, you will likely continue to be a factual resident of Canada until your family joins you or you sever most of your Canadian ties.
- Your husband will remain a Canadian resident since he maintains significant ties through the home and dependents. A temporary visit abroad will not change this status.
2. Sale of the Principal Residence
If the home is sold in May 2026:
- You can generally claim the Principal Residence Exemption (PRE) to shelter the capital gain from tax, provided it was your family’s main home for all years of ownership.
- Even if you become a non-resident by the time of sale, the PRE can still be claimed for the years you were a resident. You’ll need to file Form T2091 (IND) when reporting the sale.
3. RRSP and TFSA Accounts as Non-Residents
- RRSP: You can keep your RRSP after leaving Canada. Withdrawals will be subject to 25% withholding tax, but the account continues to grow tax-deferred while you’re abroad.
- TFSA: You may also retain your TFSA as a non-resident. It will continue to grow tax-free in Canada, but you cannot make new contributions while you are a non-resident. Additionally, foreign countries (like India) may not recognize the TFSA’s tax-free status, so income earned inside the TFSA could be taxable there.
4. Next Steps
Before leaving Canada:
- Inform CRA of your departure date.
- Review whether departure tax applies to any non-registered investments.
- Coordinate the timing of your home sale to fully utilize the PRE.
- Consult both a Canadian and Indian tax advisor to ensure cross-border compliance.