I sold my Canadian home after moving to the US: what do I owe on each side?

Yes, both countries tax the sale, and they reach opposite ends of it. Canada taxes the whole gain since you bought the place, less a principal residence exemption that shrinks for each year you owned it after leaving. The US taxes the same sale in US dollars, and if you’re not a US citizen the treaty floors your US cost at the home’s value on your departure date, so it reaches little beyond the appreciation after the move. The final Canadian tax credits against the US tax.

Do I owe Canadian tax when I sell after I’ve already moved to the US?

Yes. A home in Canada stays taxable Canadian property wherever you live, so Canada taxes you on the sale even years after the move (ITA s. 2(3); s. 248(1)). Leaving Canada only deferred the bill to the year you sell. Here is the same sale from each side.

What happens	Canada (non-resident vendor)	United States (resident seller)
What’s taxed	The whole gain since you bought it, less the prorated exemption	The same sale, recomputed in US dollars from a basis floored at departure-date value if you’re not a US citizen
The relief	s. 40(2)(b): numerator counts one plus the years you were resident in Canada while it was your home, and you have to designate the property for those years	s. 121: up to $250,000 ($500,000 joint if both of you meet the use test) on a 2-of-5 ownership-and-use test
Appreciation after you move	Not traced by date. The formula exempts B/C of the whole gain, and each post-move year shrinks that fraction	The slice the US actually reaches, since the XIII(6) floor removes only the rise before your departure; s. 121 can still exclude it up to the cap if the ownership-and-use test passes, and s. 121(c) prorates the cap where the sale traces to the job move
Currency of computation	Canadian dollars	US dollars, at the rate for each date
Withholding at closing	A quarter of the price held back; a clearance certificate moves the base from the price to the gain, it doesn’t release the cash (s. 116)	None
Filing	Non-resident T1 return for the year of sale	Reported with the treaty position disclosed

Canada left the home out of your departure tax: Canadian real property is excluded from the deemed disposition you run when you emigrate (s. 128.1(4)(b)), so the house was never in your departure-tax math. At closing the buyer runs the 25 percent clearance-certificate holdback and how Form T2062 cuts it, and you file a non-resident T1 for the year of sale. Rented it out first? That’s a separate regime: Form NR6, the section 216 return, and CCA recapture.

How much of the Canadian gain does the principal residence exemption still cover once I’m a non-resident?

Less than a full exemption, and less of it every year you stay away. The exempt fraction is B over C, where B is one plus the years the home was your principal residence while you were resident in Canada and C is the years you owned it (s. 40(2)(b)). Every year after you leave drops out of B while still counting in C, so more of the gain becomes taxable. The formula never traces gain to dates: it exempts B/C of the whole gain no matter when the value moved. Half of what survives is your taxable capital gain (s. 38(a)).

When you bought the home	What happens to the “one plus”
While a Canadian resident, then you emigrated	It survives the move, since subparagraph (i) tests it in the year of acquisition (variable B)
While already a non-resident	It never applies at all (subparagraph (ii)), a narrower starting point than the emigrant this guide is written for

The “one plus” in B is tested in the year you acquired the home, never in the year you sell. None of it is automatic, though: a year only counts if you designate the property as your principal residence for that year in prescribed form, and only one property per family unit can be designated for any given year (s. 54, “principal residence”, paragraph (c)). A cottage, or a home your spouse designated, competes for the same years you’re counting here.

Does the US tax the sale too, and does the $250,000 exclusion apply to a home in Canada?

Yes to both. A US resident is taxed on worldwide income, so the Canadian sale lands on your US return (Treas. Reg. 1.1-1(b)), with gain as amount realized minus adjusted basis (IRC s. 1001). Section 121 excludes up to $250,000 of it, $500,000 on a joint return if both of you meet the use test (IRC s. 121(a), (b); IRS Topic 701). A house in Canada qualifies if you owned and used it as your principal residence for 2 of the 5 years ending on the closing date (IRS Pub 523), assuming you haven’t used the exclusion on another sale in the prior two years and no rental depreciation was allowed or allowable.

What can still take the exclusion away	Where it comes from
You already used the exclusion on another sale in the prior two years	s. 121(b)(3) bars it unless s. 121(c) applies, a live risk if you sold a US home during the same move
You rented the home out and depreciation was allowed or allowable after May 6, 1997	s. 121(d)(6) pulls those depreciation adjustments back into taxable gain, whether or not you claimed them
You sold outside the 2-of-5 window	The full exclusion is gone, but s. 121(c) prorates the cap where the sale traces to a job move, health, or an unforeseen circumstance

Nothing in the statute keeps the home inside the US, and the window isn’t a hard cliff: section 121(c) prorates the cap when the sale traces to the job move (IRC s. 121(c)).

What is my US cost basis, and how does the exchange rate create gain that was never really there?

Your US basis starts at cost (IRC s. 1012), and if you’re not a US citizen the treaty puts a floor under it: your US basis in a former Canadian principal residence is no less than its fair market value when Canadian residence ended (treaty Article XIII(6)). The floor is automatic, no election, but the treaty position still gets disclosed on Form 8833 (Treas. Reg. 301.6114-1). Then currency splits it: the US return translates each item at its own date’s rate (IRS, foreign currency), so a swing in the Canadian dollar can invent US gain on a home that barely moved in Canadian terms.

Treaty provision	What it does
Article XIII(6)	Automatic, no election (not available to US citizens), though you still disclose it on Form 8833. Floors US basis at departure-date fair market value for a home that was your principal residence when you left, so there was no deemed sale to elect against
Article XIII(7)	Elective, and you have to file it. Covers property Canada did tax at departure, resetting US basis for it

Don’t file an election for the house. The floor is a Canadian-dollar amount fixed at departure, so it translates at the departure-date rate while your proceeds translate at the sale-date rate. That’s where the two countries’ numbers part company.

If the same sale is taxed in both countries, do I get a credit?

Yes, the US credits the Canadian income tax on the same gain (treaty Article XXIV(1); IRC s. 901). The credit can’t exceed the US tax on your foreign-source income (IRC s. 904(a)), and the creditable amount is your final assessed Canadian liability, which the closing holdback rarely matches (IRS Pub 514). The awkward case is where section 121 wipes out the US gain: the Canadian tax has nothing to credit against that year and drops into carryover, one year back and ten forward (IRC s. 904(c)).

Can paying off my Canadian mortgage create a separate US tax bill?

It can, separate from the property gain. Paying off a Canadian-dollar mortgage is a section 988 transaction, so if the exchange rate moved between drawing the loan and repaying it, the currency swing is a foreign-currency gain taxed on its own as ordinary income (IRC s. 988). The personal-use break only holds if the gain is $200 or less. Go a dollar over and the whole gain is recognized. Keep it out of the property-gain math.

What should I do next?

Pin down two dates and two values first: the home’s value when your Canadian residence ended, your US basis floor, and the exchange rates for departure and sale. Then plan both returns as one job, since the US credit rides on the final Canadian number, and check where your sale sits in the 2-of-5 window before you lock a closing date.

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.