Author Topic: Mini Case Study - What to do with stocks in the US when I'm in Canada?  (Read 910 times)

Novik

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  • Location: Ottawa, ON, Canada
What to do with stocks in the US when I'm in Canada?

Life situation: I'm 8 months away from graduating university with a degree in computer engineering. I'm a Canadian citizen living in Ontario, but I also have American citizenship through a parent.

Income: When I get a job, I expect to earn at least 50k a year (I'm getting offers already so not worried). Currently scholarships, work and parental support cover my expenses.

Expenses: Post-graduation expenses, even if I succumb to massive lifestyle inflation, will be covered by my salary with room left for saving.

Assets:
Savings Account: ~30k CAD that I am in the process of moving into vanguard ETFs using a canadian discount brokerage (Questrade).

Investment account with a US stockbrocker: My US grandfather put some money in when I was born, and it's basically been growing for 20 years. There's more than 150k in there, in stocks and bonds selected by my broker. I'm not sure what the fee is (working on finding that out) but it's probably 2%+ so not great.

Liabilities: none

Specific Question(s):  What to do with the stocks and bonds in the US account?

Relevant info: There are no tax consequences to moving the money across the border. The exchange rate is fantastic for USD->CAD right now. In the next 5 years, this year and next are likely the least amount of income I will have. I can't open a US Vanguard account because I don't have a US address.

Options:
1. Do an in kind transfer to a Canadian broker  (don't like this option - still has me paying fees)
2. Sell everything in the US account right now and use the money to buy vanguard in Canada
3. Sell everything in the US account over the next 3-5 years (to save on capital gains taxes) and use the money to buy Vanguard in Canada.
4. Sell half of what's in the US account and buy vanguard. Leave the rest where it is for another 3-5 years and see how I feel about it then. I could do this all at once or over a few years. (this option is emotionally satisfying but probably stupid)

I think option 3 is the best one, as it avoids hefty taxes, and gives me some peace of mind that I'm not young and stupid to be switching away from what's worked for 20 years because of a blog.

I'm hoping the wonderful community here can give me some perspective and advice on my options, and if anyone has tips for Vanguard investing in Canada, please share!

MDM

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Re: Mini Case Study - What to do with stocks in the US when I'm in Canada?
« Reply #1 on: September 07, 2015, 10:11:57 PM »
Novik, welcome to the forum.

If - and everything that follows depends on this - you will file taxes in the US as an independent (i.e., not claimed as a dependent on someone else's return) and have <$10,300 (std. deduct. + 1 exemption) in ordinary income, any capital gains up to $37,450 will be tax free.

In other words, you might want to start taking capital gains for the 2015 tax year when your other income is relatively low.  Even 2016 will have only a partial year of salary, so more front loading on the "zero tax gain harvesting" could be useful.

And if the Canadian tax system is different and you file there - talk with someone who knows something about Canadian taxes, e.g. http://forum.mrmoneymustache.com/ask-a-mustachian/can'eh'dian-tax-you-have-questions-i-have-answers/