Tax considerations for Canadian Snowbirds
The Globe published an article today on The flip side of retirement in the sun? A tax headache.
While most of these articles are typically an advertorial for tax accountants, it does have some useful info. The article covers the residency rule. Where are you going to pay income tax? There are two different tests:
- if you live in Canada for at least half of the year, you’re usually considered a Canadian resident.
- if that is not clear, “They ask: ‘Which country do you have the most ties to? Where is your driver’s licence, health insurance, your bank accounts?”
You are, of course, responsible for paying property tax in the jurisdiction of your snowbird property. In our jurisdictions, both in Peoria, Az and back home in British Columbia, non-residents pay higher property taxes. It is twice the amount here in Peoria for the snowbirds.
The Canada Revenue Agency “expects you to fill out a form indicating whether you own “specified foreign property” worth $100,000 or more. This includes not only your . . . (snowbird property), but also foreign investments, including stocks and bonds held in foreign brokerages and shares in private companies you have in another country.
It is important to “draw a clear line between personal use and revenue-producing property. . . The rules can be different depending on whether you’re renting the property as a money-making business or just trying to defray the cost of carrying the place by taking in rent from time to time.”
Then when you sell the property you will need to declare the capital gain in both jurisdictions. That will mean filing a tax return with that country when you sell. Canada has tax treaties with many countries, so that will allow you to claim a foreign tax credit.
For more details click on the link to the original article above.