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International Tax, Cross-Border and Expatriate Tax Expert
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How do I move to the US with Canadian Investments?

I have some substantial Canadian investments, including real estate, a mutual fund, and an RRSP. How do I move to the US and keep the most of these investments? Also, how will this affect my TFSA? Thanks, Mohammad!

This one gets complicated depending on your investments. What I will say is that the earlier you start getting your tax advisor involved, the better!

Let’s break this down a little bit by type.

For Canadian real estate investments and rental property, if you use these for personal use you typically do not have to deal with yearly CRA tax filing obligations. But, rules are very strict for selling Canadian real estate as a non-resident! Non-residents holding Canadian rental property must remit 25% withholding tax from the rent and file with CRA on a yearly basis. When it comes to selling, there are some notification and certificate requirements to wrap this up.

For Canadian Mutual Funds in Non-Registered accounts, non-residents are prohibited from buying mutual funds, real estate investment trusts, and EFTs, but you can hold onto existing ones. If you are holding a mutual fund, you fall under the Passive Foreign Investment Corporation tax reporting in the U.S., which comes with a lot of punitive tax filings and higher tax rates.

For a TFSA, a Tax-Free Savings Account, it depends on your Canadian tax residency. Once you leave Canada you can no longer contribute to the TFSA, but the account itself remains intact. This tax-free status is not applicable for the U.S. income tax, and all income earned even if not contributed will be taxable by the IRS.

For a Registered Retirement Savings Plan, the US-equivalent is an IRA, but transferring to an IRA is highly discouraged. You have three options: withdrawal, converting to RRIF for distribution, or leaving it alone.

Sound complicated? It is! And, it varies on a case-by-case basis. I always recommend speaking to a tax advisor because every investment situation is unique and the potential tax losses can be huge. Please don’t hesitate to contact me if you have questions! I’m here to help.

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