Reader Question – My wife and I purchased a resort home in Saskatchewan when the property market was just taking off a couple years ago. We purchased it more as an investment and have no real intentions to live in it, or to retire to that area. We currently live overseas in Singapore and have lived overseas for 7 years. Upon leaving Canada, we severed all ties, including a previous home, drivers licenses, and health coverage. We did maintain a bank account and still have that account for purposes of renting our new home. We rent the home to a third party at fair market value, but their lease is up at the end of May. My question is … when we visit Canada for 4 weeks this upcoming summer, would it be problematic (from a residency standpoint) to stay in the house before renting it out for the next year long lease term to new tenants?
I have done a fair amount of research in the area of non-residency, and of course like many have difficulties wading through the CRA language and ambiguity. Attempting to be as objective as possible, I see us as being deemed non-residents. When looking at the ‘centre of vital interests’ or ‘habitual abode’ I clearly see Singapore as both of these. Our children were born overseas, all of our savings are overseas, our personal possessions are with us, we own a vehicle here, and we only ever visit Canada once per year for 4-6 weeks in the summer.
How do you feel about our residency given the information I have provided? If we stay in the house for 1 month per summer and then start up a new lease, does this change things?
I suspect that you are probably not going to be a resident for tax purposes, since the property is, as you say, for investment. While it may be vacant for a period, you might get away with using it for 4 the weeks since it appears that you are only visitors to Canada.
As I see it you have 2 options. Visit for the 4 weeks and then rent the property again. As I stated above this may not deem you to be residents unless you end up here for more than 183 days.
The second option would be to ask the CRA for a ruling before the visit. This would entail some risk given the ruling may not be in your favour: However, it would provide some certainty. Note that asking for a ruling is a little different than asking the CRA if you are a resident. Rulings are an opinion on a given set of facts and generally can be relied upon.