Matt C. Altro is a contributor to Paul Delean’s business column in the Montreal Gazette. Scroll down to read Matt’s answer to the second question.

Tax strategy: There’s a bit of tax wiggle room when owning two homes

The Gazette
Monday, July 22, 2013

The tax consequences of juggling two homes or moving an RRSP state-side were among the topics raised in the latest batch of reader’s letters. Here’s what they wanted to know.

Q: “My husband and I own a home that I have occupied with our children since our separation several years ago. We recently put our house on the market and I made an unconditional offer on a new townhouse from a builder; I will be its sole owner. Our large house hasn’t sold and it won’t be feasible to carry two mortgages for more than a few months, so I am already contemplating putting the townhouse on the market as well. We’ll stay in the large house until either property is sold. If the townhouse sells first, will it be considered ‘flipping’ the property? Do I have to live in the townhouse for it to be considered my principal residence? Will I have to refund the tax rebate that applies to new home construction?”

A: Without having all the details, Revenue Quebec said it could give only general answers, but it looks like you’ll get a bit of wiggle room from the tax authorities when it comes to the townhouse. They don’t require that a home be inhabited for a minimum length of time to qualify as a principal residence (though a family unit can designate only one property as principal residence in any given year). You’re not required to reimburse the provincial sales-tax refund on a new home if it’s sold before occupancy. And it won’t be considered a flip — and taxed as business revenue — if the real intention was to live in it, though any profit from a sale could be a taxable capital gain (depending on your principal-residence election).

Q: “What happens to a Canadian’s RRSP if they move to the United States? Is it best to leave it, collapse it or transfer it?”

A: Financial planner Matt Altro of MCA Cross Border Advisors Inc. says it depends. “Thanks to special provisions in the Canada-U.S. tax treaty, he or she can leave the RRSPs intact and the U.S. will allow them to defer taxes on all income earned provided the correct forms are filed each year with the IRS. For some clients who are nearing retirement, it may make more sense to collapse the RRSP once stateside. That’s because non-residents of Canada can collapse their RRSPs and pay only 25 per cent withholding tax to Canada. If properly planned, the Canada-U.S. tax treaty may be leveraged to reduce the withholding rate to 15 per cent. Considering Canada taxes its residents on RRSP/RRIF income at ordinary rates (up to 50 per cent), this can lead to a significant saving for those who are able to retire in the U.S.”

The Gazette invites reader questions on tax, investment and personal finance. If you have a query you’d like addressed, send it to Paul Delean, Gazette Business Section, Suite 200, 1010 Ste. Catherine St. W., Montreal, Que., H3B 5L1 or to by email to

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