Advice about moving to Ontario, Canada

[Flex4]

I am new to the this website, I love the great advice and the friendly and helpful group here.

We are currently planning on a move and retirement in Ottawa, Ontario, Canada from northern California. Everyone in our family is a dual citizen, so I don't have to worry about our immigration status in Canada. What I am concerned about is our tax obligations and wether or not it will be more expensive or cheaper to live in Ottawa, Canada, as opposed to Califronia? I am aware of the tax treaty and protection agaisnt dual taxation, but what I don't have information on is the additional taxes that I may be imposed with. We do plan on working for approximately 5 or 10 years there to supplement my retirement, does anyone have any advice about wether or not that will complicate my tax requirements with Canada and the US?

I will be recieving a pension from California, and we still need to sell our home before the move. We can't afford to live in California anymore and are hoping to live near family in Ottawa. If anyone has any tax information or additonal costs not related to taxes that we need to factor into our planning, we would truly appreciate it.

We are also planning to buy a home in Ottawa, does anyone have any advice about the home buying process there.

Thank you in advance for any information or advice you provide us.

[Nemo2]

We moved from Ottawa to Belleville two years ago; I'm afraid I can't help you with tax or cost of living info, but I can give you the name of an excellent realtor, (we both bought & sold through her and her husband):

http://www.lorrainegoulard.ca/

[Flex4]

Thank you for your relator referral, once we get situated and ready for the move we will give her a call.

Peter

[Queenie]

Hi Flex,

Good luck with your move. As far as taxes are concerned you will need to file form 2555 "foreign earned income" along with your other IRS forms. This form allows for a max of $87,600 exclusion for foreign earned income, so that is quite helpful. You pay tax on the remaining income. I am in no way a tax expert, but this is what I have used while working and living overseas.

Queenie

[Flex4]

Thank you Queenie for the IRS information, I certainly got more from you than I did from the IRS yesterday, I had obviously caught somone on their bad day becasue she was not willing to offer any information ref. paperwork needed to be filed, it was liking pulling teeth.

[photoguy]

Quote:

Originally Posted by Flex4 I will be recieving a pension from California, and we still need to sell our home before the move. We can't afford to live in California anymore and are hoping to live near family in Ottawa. If anyone has any tax information or additonal costs not related to taxes that we need to factor into our planning, we would truly appreciate it.

Heating costs

Be aware that mortgage interest is not deductible in canada and there is no such thing as a 30 year fixed.

Another huge potential cost could be currency fluctuations affecting your pension payments. In the time I've been in the US the canadian dollar went from 60 cents to par (14years).

Edit: I decided I would never live in Ottawa again after walking home from the bus stop and upon going inside having to use an ice scrapper on my glasses from the water condensing and freezing!!!

[e86s54]

Quote:

Originally Posted by photoguy Heating costs Edit: I decided I would never live in Ottawa again after walking home from the bus stop and upon going inside having to use an ice scrapper on my glasses from the water condensing and freezing!!!

I grew up in Ottawa and visit often. Ottawa is certainly cold in the winter, although with global warming, it has been softened somewhat. The trick to winter is to get out an enjoy it (late fall and early spring, to me are the worst times of year). From downtown Ottawa, there are many ski hills available. X-country skiing is excellent, especially in the Gatineau Park. Of course there is skating on the canal, etc.

Ottawa is one of the cheapest national capitals to live in. Very stable and safe. It has all the benefits of a capital, with many festivals, museums, theater, etc.

[Ed_The_Gypsy]

Quote:

Originally Posted by Queenie Hi Flex, Good luck with your move. As far as taxes are concerned you will need to file form 2555 "foreign earned income" along with your other IRS forms. This form allows for a max of $87,600 exclusion for foreign earned income, so that is quite helpful. You pay tax on the remaining income. I am in no way a tax expert, but this is what I have used while working and living overseas. Queenie

That is EARNED income. Working is the operative word. Income from retirement funds does not count. You have to work in Canadistan to get that exclusion. You do qualify for a credit for any income taxes you pay in Canada, however. File in Canada first. File for an extension with the IRS because you live outside the country. When you get your Canadian returns back, then file your US taxes.

What may be more important to you is that you must file a form (I forget which one) every year with the IRS if you have more than $10,000 in a foreign bank account.

You will probably have to file four times a year, too.

I pay a "cross-border" accountant to do my US and foreign (last in Canada) taxes. It costs me about $500 for each country. I could do it myself, but I want someone else to talk to the government in case I have a problem. He has made some mistakes in the past, but nothing serious in the end.

Your taxes will be a lot simpler than mine, so you should opt to do your own, at least after the first year.

Have fun! Ottawa is supposed to be a very interesting place to live.

You do know about winter tires, don't you? They are NOT snow tires. They are silicone rubber radials. Buy a set. You may have to buy them on-line as I did. Buy in the fall. They sell out fast.

[bruce1]

Quote:

Originally Posted by Ed_The_Gypsy You do know about winter tires, don't you? They are NOT snow tires. They are silicone rubber radials. Buy a set. You may have to buy them on-line as I did. Buy in the fall. They sell out fast.

Buy them early in the fall like the first week of October.

[Flex4]

Thank you for all the great advice, this is the stuff I needed to get me set-up. As far as Ottawa goes, I know the city really well since I grew up there till the age of 20 and have visited several times since I've move here. I have allot of fond memories with friends and family. I am also very aware of the winters, because I was the oldest in the family there were numerous winters where I shoveled snow fromt he driveway before my father could afford a snow blower. Like any location that has snow a person easily adapts to their surrounding and takes advantage of recreational activities no matter what the conditions are such as snow or rain, etc. Believe it or not I loved skating on the canal, back in the day when I was cruising for girls, now I have my girl of 25 years and would love to skate the canal again with her. I don't mind snow, since we live in the mountains now, east of Redding California. My two boys are in their early twenties and love winter sports such as hockey, snowboarding, sleding, etc.

Along with the memories I still have to way the odds of weather its feasable to move their when it comes to financial stability. Hey Ed, can you give me your accountant's information, it appears that I will definately have to have a proffessional take care of my tax filings for me the first coulple years for sure.

Photoguy, can you please explain to me what they have in replacement of a 30 year fixed, if that is not available.

Thank you again for all you help.

Peter

[Meadbh]

Mortgages in Canada have a maximum amortization of 35 years. The most common term for a fixed mortgage is 5 years, after which you can pay off the balance, renew the mortgage at the then current rate, shop for a different one, or switch to a HELOC. The usual downpayment is at least 20%. Mortgage interest is not tax deductible. OTOH, capital gains on the sale of your principal residence are not taxable.

You might find this link helpful.

http://www.td.com/economics/special/...ort_market.pdf

[Flex4]

I'm sorry what is a HELOC?

[Meadbh]

Home
Equity
Line
Of
Credit

[Flex4]

Thank you, I'm sorry and what is OTOH?

[Nemo2]

Quote:

Originally Posted by Flex4 Thank you, I'm sorry and what is OTOH?

[kcowan]

I don't know about your health insurance but you will have to qualify (90 days waiting if clear). In city skiing and trips to Quebec should satisfy your boys. Plan on spending some time down south in the winter once your are retired.

[Nuiloa]

Don't forget that Canada is a socialist country, masquerading as a democracy. We pay a lot of taxes to support our health care and welfare systems. Depending on your income, you could lose 50% or more to taxes - and that includes retirement income. In fact, if you make too much, they won't even give you the old age benefits you have paid for all your working life. Instead, they give them to someone who has never worked or bothered to save.

A person who has no retirement income is guaranteed about $25,000 a year in government pensions. My mom, on the other hand, worked all her life and only made $24,000 a year because she didn't qualify for the supplements!

The culture of mediocrity in this country saps any initiative and rewards those who don't want to work and/or don't save anything for their retirement.

Nui [moderator edit]

[REWahoo]

Flex4, this may be of some assistance: * Acronyms and Slang Frequently Used on the Forum *

[photoguy]

Quote:

Originally Posted by Nuiloa Don't forget that Canada is a socialist country, masquerading as a democracy. We pay a lot of taxes to support our health care and welfare systems. Depending on your income, you could lose 50% or more to taxes - and that includes retirement income.

This came as a big surprise to me, but the top tax brackets in Canada are actually LOWER than in the U.S. And we don't even have national healthcare in the U.S.

[ERD50]

Quote:

Originally Posted by photoguy This came as a big surprise to me, but the top tax brackets in Canada are actually LOWER than in the U.S. And we don't even have national healthcare in the U.S.

You really need to look at TOTAL taxes collected, at all levels. It means nothing to compare marginal rates without also understanding the standard deductions and other exemptions written in the tax code. Also, one country may fund many more things at a local level - it's just not apples-apples.

Quote:

Originally Posted by Nuiloa The culture of mediocrity in this country [Canada] saps any initiative ...

Well, I could counter that with all the high-tech, intellectual property, and other advances coming out of your fine country, but I'm having trouble thinking of many. RIM/Blackberry, ....?

-ERD50