Blog post

Question

Hi Philip,

First let me thank you for your very informative “Americans Living in Canada” FB group. I learn a lot by reading through the posts – this is useful to me as my family is going to relocate to Canada (from Texas) and I started the immigration process.

The first step of this adventure is planned for this year and this is where I was hoping I could ask you a question. My daughter is an American-Canadian dual citizen, she is going to move to Quebec to pursue her studies by the summer. We are planning to buy her an apartment and were wondering what the tax implications on both sides of the border would be for us and for her. The idea is that she will be the owner of the apartment with her name on the title. Mum is also an American-Canadian dual citizen and dad is an American-French dual citizen. I tried to find some information online but I am not too sure about the tax implication (gift tax, estate…). What is the best way for mum and dad to purchase the real estate with minimal tax implications (if any)? What do we need to consider?

This year we will also be looking for a cross-border counselor/financial advisor/tax specialist for things like investments, estate planning, trust, US/Canada tax preparation etc. and for before and after the move. Given current delays, I will likely receive my PR late this year, so my wife and I’s move will be by spring next year. Do you take clients from Quebec?

Thank you!
XXXX XXXXX

Answer

Hi XXXXXX

Thanks for the email and the kind words about the work we’re doing on the Facebook group.

I can give you some general tax details below based on the information provided, however closer to the move we should arrange for a proper consult:

• Yes, as Americans living in Canada you’ll be required to file both Canadian and US income tax returns including foreign and domestic asset disclosures such as FBARs and T1135 reporting.
o The first year of filings can be tricky as we would need to review your investments and assess how the first-year Canadian returns need to be filed
• If you plan on gifting money for your daughter’s eventual Canadian apartment purchase (which would allow her to claim a principal residence exemption in the future) you’ll need to file a gift tax return in the year of the gift. Given the current exemption amount you will not owe any US gift tax on the transfer (assuming you haven’t used up all your estate tax exemption already).
• There will not be any immediate Canadian or US implications to purchasing a Canadian property, assuming the property is not rented.

Yes, we do help clients in Quebec, in fact, I grew up in Quebec just outside of Ottawa and my parents still live in Quebec.

You’ll want to work through your investment planning well before moving up to Canada. Proper planning and transferring of investments up to Canada will help mitigate many expensive tax filing compliance issues such as extensive T1135 reporting requirements.

I’ve copied in our cross-border investment team to this email.

I’ll let you, Chris and Dixie connect.

Once you figure out the planning for the investments we can circle back around to any tax planning that needs to be reviewed.

Hope that helps.

Cheers

Phil