7 Months outside of Canada

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Michèle (anonymous) Posted 3 days ago MadanCA Team edited answer 46 minuteutes ago

What would happen if I have a house in Canada but spent 7 months outside of Canada every year instead of the required 183 days (6 months)? Are there penalties upon the sale of the house? What if I don’t sell it but am just spending more than the required time outside of Canada?

1 Answer

score 0 · Answer 1 · 2025-06-09T15:49:28+00:00

Dear Michèle,

Thank you for your inquiry.

You asked what would happen if you spent 7 months outside of Canada each year while still owning a home in Canada. Below is a detailed explanation of how this may affect your residency status, tax obligations, and any future sale of your Canadian property.

1. Canadian Residency Status – Not Based Solely on Days

There is a common misconception that being outside of Canada for more than 183 days per year makes you a non-resident. In reality, the Canada Revenue Agency (CRA) determines residency based on your residential ties to Canada, not just how many days you spend here.

Key residential ties include:

Owning a home in Canada
Having a spouse or dependants in Canada
Maintaining a Canadian driver’s license, health card (OHIP), bank accounts, etc.

So, even if you’re outside of Canada for 7 months each year, if you keep your home and other ties, the CRA will likely continue to consider you a factual resident of Canada for tax purposes.

2. Tax Obligations While Abroad

As a factual resident of Canada:

You will be taxed on your worldwide income
You must continue to file a Canadian T1 General tax return each year
There is no penalty for extended absences if you maintain your Canadian residency status

If, however, you sever most or all of your residential ties and become a non-resident, then different rules apply (see below).

3. Selling Your Canadian Home as a Non-Resident

If the CRA determines that you are a non-resident at the time of sale, then:

You must file Form T2062 to report the proposed disposition of the property
A 25% withholding tax on the gross sale proceeds will be held by the buyer’s lawyer in trust
You may still claim the Principal Residence Exemption (PRE) if you lived in the home while you were a Canadian resident
Once the T2062 is processed by the CRA and a Certificate of Compliance is issued, your holdback will be released, less any tax owing
After year-end, you will need to file a Section 116 Non-Resident Tax Return to report the gain and claim any refund of excess tax withheld

If you’re still considered a Canadian resident when the home is sold, you would report the sale on your regular T1 return and potentially claim the full PRE.

4. Keeping the House but Living Abroad

If you simply spend more time outside of Canada but don’t sell the house:

You’ll likely remain a Canadian tax resident if your main residential ties are still in Canada
Be aware that OHIP coverage in Ontario, for example, requires physical presence in the province for at least 153 days per year

Next Steps

If you’d like to assess your residency status in more detail or plan for a potential future sale, I’d recommend booking a non-residency consultation. We offer a 30-minute session for $140 + HST, which you can schedule here:
👉 https://madanca.com/contact-us

Please don’t hesitate to reach out if you have any follow-up questions.

7 Months outside of Canada

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