Should I sell or rent my Canadian house before I move abroad?
Start by deciding what you want your residence position to be, because the house is the fact most likely to decide it for you. A dwelling kept available for your own use is the heaviest tie there is, so if the intention is to cease Canadian residence the property has to be dealt with in a way that removes your access, whether by sale or by a genuine letting on ordinary commercial terms. If you would rather keep it available, that is a legitimate choice, but it should be made knowing that it points towards continued residence and the filing obligations that come with it.
What makes a lease count as arm's length for residency purposes?
The question behind all of it is whether you can get the property back when it suits you. A lease to an unrelated tenant, at market rent, for a fixed term, without a clause letting you reoccupy early, and with the furniture and personal effects out of the house, is the version that lightens the tie. A short rolling arrangement with a relative, a rent well below market, retained storage or a set of keys kept for your own use all pull the other way. Put the terms in writing before the tenancy begins, because the terms are the evidence.
Can I keep my Canadian house and still be treated as non-resident?
It is possible, and it is harder than most people expect. The dwelling is weighed alongside a spouse and dependants at the top of the list of ties, so keeping it means arguing against the strongest single fact in the analysis while everything else has to be clearly on the other side. Where the property is let at arm's length on real terms and your household, your working life and your home abroad are all consistent with having gone, the argument can be made. Where the house is available to you and the rest is ambiguous, it usually cannot.
Who should hold the keys to my Canadian home while I am abroad?
Whoever holds them should not be holding them for your benefit. The test that matters is access: a key kept with a neighbour so you can let yourself in on visits, a room reserved for your things, or a relative housesitting on the understanding that you return, all leave the dwelling available to you in substance whatever the paperwork says. Keys with a letting agent acting for a tenant are a different matter. This sounds like a small detail and it is one of the first things an examination of the facts asks about.
Does the house decide my residency on its own or the whole picture?
Residency is decided on the facts as a whole, and the dwelling is one of the facts that carries the most weight, ranking with a spouse and dependants. So it does not decide the question by itself, but it is rarely outweighed by a long list of minor points such as a bank account closed or a driving licence surrendered. The practical approach is to deal with the heavy items first and stop optimising the light ones. A client who cancels every subscription and keeps the house available has not moved the analysis very far.
What has to be in place before the first rent payment arrives?
The withholding obligation on rent paid to a non-resident owner attaches to the payment, so it begins with the first one rather than at the year end. Before that payment is made you want the lease signed on arm's length terms, the person who will collect the rent clear that tax is to be withheld and remitted, and a decision taken on whether you will be filing to have the tax worked out on the net rental profit instead of the gross rent. Arrangements that alter how the withholding is calculated have their own timing and cannot always be put right afterwards.
What is a foreign tax credit?
A credit against your home-country tax for income tax you already paid to another country on the same income, so the same amount is not taxed twice at full rates. It is capped: you cannot credit more than your home country would have charged on that income, which is why a higher foreign rate leaves an unused balance rather than a refund. In the US it is claimed on Form 1116, in Canada on the T2209 and T2036, in India on Form 67. See Form 1116.
How do I claim the foreign tax credit?
You report the foreign income, the foreign tax paid on it and the category it falls into, then compute the limit — the credit cannot exceed your own country's tax on that same income. You need evidence the foreign tax was actually paid or accrued, not merely withheld on paper. The form differs by country: Form 1116 in the US, T2209 and T2036 in Canada, Form 67 in India, and the Indian form must be filed before the return. See Form 1116.
