# Want to return to Canada, does it make sense?



## moconnell (May 17, 2010)

Hi all, 

I am new to this board. My husband and I are Canadian citizens. We moved to the US in 2004, and I have my US citizenship, he has his green card. We love the US, but we miss our friends and family at home in Ottawa. We are toying with the idea of moving back. I'm a SAHM, and my husband works for a US hedge fund that does not care where he resides.

My biggest fear is taxation. He is currently making a mid six-figure income, and I'm worried that we will have to pay maximum taxes in both countries (are there any penalties for being a high income earner?). Also, does anyone know what the penalties are for bringing money back into Canada? If we brought home a couple hundred thousand to put down on a house, would the Canadian government want a chunk of that money?

Secondly, how easy is to purchase a home as a first time home buyer in Canada? How much would we need to put down, and are there any "catches" to getting a mortgage as a former resident/current citizen who is returning back to the country. We pulled our credit bureaus in Canada and have no credit history at this point (though we a good credit score in the US).

We're looking to move back in the summer of 2012, if it makes sense. I don't want to do it if most of our hard-earned income would go to both governments.... Any tips on what we should do? Oh, side note, we have four kids (one born in Canada, three in the US; all are very young!).

Thanks!


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## Bevdeforges (Nov 16, 2007)

As a green card holder married to a US citizen, you and your husband would be subject to US taxes (well, at least as far as filing) no matter where you live. But, there are tax treaties that pretty much eliminate double taxation. (You just have to file two sets of tax returns.)

Your husband can exclude up to about $92,000 of his income when you live overseas. Anything over that, you can take foreign tax credits for (i.e. anything you pay to Canada is a tax credit against what you'd owe in the US). 

The usual advice is to process your husband's US citizenship before you leave the US. That leaves you with the most options (say, to move back to the US if for any reason you should decide to do so). If he gives up his green card you'd be back to square one should you decide to return to the US. 
Cheers,
Bev


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## NickZ (Jun 26, 2009)

You don't say which US state you're living in but going by the hedge fund bit I'm guessing east coast. I think in general you'll find Cdn taxes lower then any of the major east coast states.

20% down makes you a prime borrower. 5% down means you'd need CHMC insurance. I don't remember what the rules are for that. Maybe check the CHMC website? 

The bigger issue might be the type of income. If the income is lumpy then that might cause problems. 

There is no problem bringing money into Canada.


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## moconnell (May 17, 2010)

NickZ said:


> You don't say which US state you're living in but going by the hedge fund bit I'm guessing east coast. I think in general you'll find Cdn taxes lower then any of the major east coast states.
> 
> 20% down makes you a prime borrower. 5% down means you'd need CHMC insurance. I don't remember what the rules are for that. Maybe check the CHMC website?
> 
> ...


Thank you for both of your replies! That helps!

NickZ- I'm very surprised that you think Canadian taxes will be lower than the US ones, I thought it was the other way around (we are in IL, by the way). I did look on the CMHC website, and there is PMI when you put less than 20% down. PMI is usually 0.5-2.75%, not sure if that is annually or for the whole duration of the mortgage.... Half of my husband's income coems from a base salary, the other half is a bonus (which of course, varies). Not sure how that will factor in.

We are thinking of establishing HSBC Canadian accounts in the near future to get the ball rolling on establishing credit, etc. Hopefully that will help?


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## moconnell (May 17, 2010)

Bevdeforges said:


> The usual advice is to process your husband's US citizenship before you leave the US. That leaves you with the most options (say, to move back to the US if for any reason you should decide to do so). If he gives up his green card you'd be back to square one should you decide to return to the US.
> Cheers,
> Bev


Agreed!


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## NickZ (Jun 26, 2009)

In the US you pay federal,state and some times local income taxes. No? I forget.

In Canada most people think of a total tax take even if everybody pays federal and provincal.

What's the state tax in your area? My brain has a 10% number for NY . Of course I could be remembering something else. Unless you're in a local tax state like Florida I don't think you'll find a big total difference. If you're in a high tax state like NY I think it ends up higher. 

One difference is I think the tax brackets are lower in Canada then the US.

I think the CHMC number is a one time charge that gets rolled into your mortgage.

If you have an US HSBC near you then it's likely best to start with that. 

What are the income tax rates in Canada?

Looks like Ontario maxes out at 40% these days. 

» 2010 Federal Income Tax Brackets (IRS Tax Rates)

depending on how much you pay on state and any local income tax.


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## moconnell (May 17, 2010)

Yes, you are right. It is very similar. I am surprised. The only difference is that there is 15% sales tax on nearly everything in Ontario. However, that would easily be offset by not having to pay for health insurance or save as much for our four kids to go to college! 

Also, thanks for the PMI info. My husband thought it was 2.5% per year, which would add thousands onto our payment. To me, a one time payment rolled into a mortgage makes more sense (plus, it is more affordable). We are not sure how much we would put down. We're thinking it may make sense to put down a smaller downpayment, and have more money in savings (just in case we get some kind of a tax surprise). We'll see.

Thanks so much!


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## Phil Hogan (Jun 6, 2010)

Bevdeforges said:


> As a green card holder married to a US citizen, you and your husband would be subject to US taxes (well, at least as far as filing) no matter where you live. But, there are tax treaties that pretty much eliminate double taxation. (You just have to file two sets of tax returns.)
> 
> Your husband can exclude up to about $92,000 of his income when you live overseas. Anything over that, you can take foreign tax credits for (i.e. anything you pay to Canada is a tax credit against what you'd owe in the US).
> 
> ...


Bev

Good advice regarding obtaining citizenship before entering Canada. I have many clients that wished they had obtained their citizenship before entering Canada. Some have lost their Green Cards and wish they could move freely between the border.

Phil


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## moconnell (May 17, 2010)

Cross_Border_Tax said:


> Bev
> 
> Good advice regarding obtaining citizenship before entering Canada. I have many clients that wished they had obtained their citizenship before entering Canada. Some have lost their Green Cards and wish they could move freely between the border.
> 
> Phil


We're actually now toying with the idea of moving to Canada in a few months, and just renting. Is there a way for my husband to keep his green card if we do that? He would be living in the U.S. and commuting to Canada on the weekends and the children and I would be in Canada. How would this arrangement affect his green card, and taxes?


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## Canadian Paul (Jun 9, 2010)

I hope its okay for me to ask a few related questions here. My wife and I are in a (somewhat) similar situation. We are both American citizens and I have Canadian citizenship. We'd like to move to Vancouver 4 to 5 years from now. I estimate our income in Canada will be between 200-250k (once my wife is able to work) and it's comforting to hear that double taxation should not be an issue. 

Like the OP though, I pulled my Canadian credit score and didn't really have anything in there (all I have is a credit card that has been open since 2003, my OSAP loans didn't show up...is that normal?). Equifax wouldn't calculate a score for me because of the lack of data. 

Can anyone tell me how I might boost my score over the few years while living in the US? The OP mentioned a HSBC Canada account, I'm wondering how would that help given that I didn't see my CIBC chequing account on my credit report. 

Thanks.


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