Real estate, RRSP, and future move

[Shep & Kali 0]

I've just spent 45 minutes browsing various forums, so maybe my search-fu is weak, because I can't believe this hasn't been asked before.

I own a house in Canada, and given the current real estate crash in the USA, and the fact that I should be moving down in early '09 (I hope), houses might actually be affordable when I get down there.

But I have a fuzzy idea that there's some sort of financial penalty for transferring money from country to country, like if I sell my house for $100,000 (for the sake of round numbers), and transfer my $100,000 in savings and RRSPs to the States (again, round numbers), I would get some amount deducted for bringing it into the USA.

I'm aware that there is a penalty to cashing RRSPs before retirement.

I also know that I need to declare amounts worth more than $9,999 at the border.

I'm wondering what I need to know about selling real estate in Canada to transfer the cash to the USA.

Is there a levy or duty or "bringing money into the country" tax or something I should be aware of?

[trailmix 77]

Hi Shep & Kali and welcome,

I don't know the answers to your questions 'for sure' - however I know of no levy etc with bringing money in to the U.S. - tax considerations will be a different thing of course - there is actually no 'penalty' for withdrawing your RRSP before retirement - it just becomes income for tax purposes. Anyway just wanted to say hello and welcome to the Canada forum!

Edited February 18, 2008 by trailmix

[michellea 0]

I sent money across the border via Wire transfer at the bank.

I always made sure it was less than $10k at one time,

we confirmed with our accountant, that because he is my spouse (and was at the time of the transfers) there are no tax implications on him on this end.

I had no hassel at the other end. I made a profile at my RBC so that they always had the information right there

Hope this helps.

[Krikit 1,165]

There is no financial penalty with regard to real estate profits and transferring the money to the US. It's not necessary to bring large amounts of money with you across the border. It's easier to do an electronic transfer (or wire transfer if you need it immediately) through Custom House. www.customhouse.com You do NOT have to limit any transaction to under 10k. There is also no levy or duty for bringing money into the country.

Probably the only thing you need to know about selling your house is if it happens after you have already moved to the US. Revenue Canada will put a hold on your funds until they have reviewed your tax information and made sure you are current. If you are not, they will withhold monies owing and then release the remainder of the funds. Keep in mind that this does not happen if you are still a Canadian resident. This only applies to non-residents.

Welcome to VJ!

[Krikit 1,165]

Oh. One more thing to remember..... if you DO bring any bank drafts or cheques with you to cash in the US.... MAKE SURE IT IS IN US FUNDS. I cannot stress this enough. The American banks do not know how to handle foreign funds. If you do happen to find one that does, they will charge you a mega arm and a leg to cash it, and also screw you on the exchange rate. USE CUSTOM HOUSE.

/rant

[Cdn_Ali 11]

I second the suggestion to use Custom House for transferring funds. I have used them many times - not only do they give a better rate than the banks, but they do not charge all the fees for wire transfers. I have a bank account in the US and Custom House set me up for online transfers so I can transfer money from my Canadian bank right into my US account so I don't even need to involve a real person anymore.

As for selling your house, best to do it while you are still a resident of Canada. There will be no penalty if it is your primary residence. If the timing is such that you can't sell until you've ceased to be a resident of Canada, there will be a holdback - unless you apply for a "Clearance Cerficate" in advance. Currently, these are taking 4-5 months to process so I would avoid this route if you can.

When you are ready to purchase a new home in the US, use Custom House to transfer whatever funds you require...and yes, it CAN be more than $10,000. The reason for the $10,000 rule is due to the proceeds of crime act, which would not apply to you because you will have a paper trail that will clearly show your money came from the sale of your home.

I can't really comment on your RRSP situation because the amount you will be taxed depends on your income level. If you are in a very high income tax bracket, it actually might be better to wait until you are no longer a resident of Canada and will be earning much less.

Edited February 18, 2008 by Cdn_Ali

[Flames9_RN 358]

Have Used Customhouse for a few yrs now! They have two methods of transferring $$$--Electronically, which is FREE, and they offer a wire service which costs $$. Tajes a bit to initially set up the account, but its not that hard and customer service is top notch!!

Others have stated RBC and TD are good banks to deal with as well.

I kept my $$$ transactions under $10,000. One really doesnt have to, but 10,000 and over sets off "alarms" because of possible $$ laundering!! Best of luck

[Krikit 1,165]

Yes, Flames put me onto Custom House a few years ago and I thank him for that. The wire service cost is $20. Also, the exchange rate at Custom House is far better than any US bank will give you, plus the US banks will charge you a hefty service fee. Transactions over 10k are verified by Custom House and the institution you are transferring from, and you sign a document stating that the money is legit. It's pretty painless.

Edited February 19, 2008 by Crikey!

[Reba 2]

Go to the book store and look for a book called "The Border Guide" lots of info in there about finances and whatnot for Canadians moving to the US.

Also, a consult with a financial planner may not be a bad idea.

[Texanadian 10]

Go to the book store and look for a book called "The Border Guide" lots of info in there about finances and whatnot for Canadians moving to the US.

Also, a consult with a financial planner may not be a bad idea.

That is a FANTASTIC book.

http://www.amazon.com/Border-Guide-Canadia...l/dp/1551805723

[Krikit 1,165]

I didn't find that book all that helpful. I found it too generalized, and not quite on target for some of the issues. I guess I was looking for something a little more indepth. Those scenarios just scraped the surface for me.

[Shep & Kali 0]

Thank you for all the replies; I'll try to track that book down. Selling the house vs. renting it for income has always been a wrestling match in my mind, but that's probably financial-advisor conversation material.

[Krikit 1,165]

Thank you for all the replies; I'll try to track that book down. Selling the house vs. renting it for income has always been a wrestling match in my mind, but that's probably financial-advisor conversation material.

The problem with renting after emigrating is that if you sell the house at a later date (while still living in the US) you will now have to pay tax on the capital gains vs non-taxable as the primary residence.

[trailmix 77]

Thank you for all the replies; I'll try to track that book down. Selling the house vs. renting it for income has always been a wrestling match in my mind, but that's probably financial-advisor conversation material.

The problem with renting after emigrating is that if you sell the house at a later date (while still living in the US) you will now have to pay tax on the capital gains vs non-taxable as the primary residence.

Very true. The other thing is the hassle of renting out your property when you aren't there to look after it. My Sister and BIL owned 2 houses in Calgary - I won't even go in to the hassles they have encountered - the zoo that lived with the very-nice-on-paper and meeting couple, or the other couple that vented their dryer in the furnace room and complained that the furnace wasn't working properly as they were getting dirt coming through the vents.

Edited February 19, 2008 by trailmix

[Krikit 1,165]

Very true. The other thing is the hassle of renting out your property when you aren't there to look after it. My Sister and BIL owned 2 houses in Calgary - I won't even go in to the hassles they have encountered - the zoo that lived with the very-nice-on-paper and meeting couple, or the other couple that vented their dryer in the furnace room and complained that the furnace wasn't working properly as they were getting dirt coming through the vents.

Yeah. One of the main reasons I chose not to rent either. Though some days I really regret not holding onto my house.