I’ve recently moved to the US as a green card holder with my American spouse and have come back to Canada to close on my home. Is it true that the capital gains on my Canadian home's market value since moving to the US are both taxable by the IRS and CRA, even if it has remained empty and used to function as our principle residence? How do I provide provide evidence of market value if needed to do so?
The capital gains on the Canadian home sale will be ~$100k USD.
Home is likely to close 4-5 months following our move to the US. My wife and I purchased a US home in the fall of 2025. I understand the CRA withholds 25% of the home sale purchase and you have to file a certificate of compliance 2064/68 within 10 days of sale to reduce this amount. My second question is will they reduce this withholding amount to zero dollars given the fact that I should fall under the Canadian principle residence exemption? Can I file for a non-resident return with an ITN immediately after home sale, or do I have to wait until 2027 tax season?
It sounds like the IRS won’t ding us because we fall under the $250k/$500k USD single / married threshold for home sale exclusion outlined under IRC section 121. The IRS gives the exemption on the sale of a home you’ve lived in 2 of the last 5 years.
Any help or insight is greatly appreciated. Thanks for reading.
Moved to US from Canada – tax implications for Canadian home sale
byu/dendiggity intax
Posted by dendiggity
4 Comments
You’ll have to pay USA tax. Welcome to America!
The house isn’t an issue. if you lived in the house as your primary residence for at least 2 of the last 5 years then so long as your gain is less than 500k none of the gain will be taxable in the US.
They don’t care about your Canadian exemption at all. The U.S. doesn’t track other country’s tax in that way. If you didn’t already qualify for the exclusion what you would do is tell the US that it was a Canadian residence, Canada would have first dibs on taxing it due to the ordering rules. Then you would tell the US how much Canadian tax you paid on it.
Due to the treaty double taxation is not allowed, so you would only be taxed in the U.S. if the U.S. rate was higher than the Canadian rate. (Aka if the U.S. rate of tax on a house was 20% and you paid 18% in Canada, you would owe the U.S. 2%). But none of this actually applies though because you said your gain is only 100k and you lived in the house for 2 of the last 5 years.
On a separate note, As a green card holder you will be liable for tax on your worldwide income. This started the moment you got your green card and will remain until (if) you ever give it up.
But even though that sounds bad in theory, due to foreign tax credits usually you won’t be double taxed so the main issue is just the complicated filing not the tax themselves.
Oh wow, navigating tax implications after moving between countries can be such a headache. It sounds like you’ve got a solid understanding of the IRS rules with the home sale exclusion, which is a relief.
Just to clarify, since you’ve been living in the US and sold the Canadian home, you’re likely right about the capital gains being taxable by both the IRS and the CRA. That $100k gain could really complicate things depending on how long you lived in your Canadian home and your residency status when selling.
For the CRA withholding, the principal residence exemption can indeed reduce your withholding tax, but you’ll still need to file that compliance certificate to potentially reclaim any overpayment. Just remember, it’s important to keep documentation ready to prove your residence status and any calculations of market value.
Honestly, it’s always best to consult a tax professional who understands the cross-border issues to help you navigate this, especially with timing around filing non-resident returns.
What other properties are you managing, or is this the only one? Also, how are you feeling about the move overall?
What makes you think that the calculation of the gain for U.S. tax purposes as a U.S. tax resident is computed by reference to your property’s value at the time you moved-to-the/became-a-green-cardholder-of-the U.S.? Intuition? (I can understand why one might anticipate that this is reasonable.) Did you try to rent it? It seems inconsistent to say that you “used it to function as our principle [sic] residence” while at the same time “it has remained empty”. Of course, it is possible to empty out a property and hold it out for sale vs. to rent it, or even to change one’s intent between the two possibilities.
I used to do a lot of inpatriate work, and had clients who sold their former non-U.S. residences (including after conversion to rentals) while working for a few years (and becoming residents for U.S. tax purposes) in the U.S. There were some unpleasant surprises at times when a tax-smart strategy had not been considered vs. figuring it out after the facts had unfolded.
You would likely benefit by engaging a U.S./Canada cross-border tax specialist.