Case Study: How David Saved Millions in Tax by Moving Home at the Right Time
SWAN Wealth Management
Saving on Tax by Moving Home at the Right Time
David* is in his mid-30s with young children and strong ties to Canada. He had spent several years in the US working for a major tech company, where he accumulated millions in stock—not just stock options, but actual shares.
When we started working with him, we realized that the clock was ticking in terms of being able to exit the country without a huge tax hit.
The Problem: Exit Tax on US Stock Gains
David held a green card but had not yet reached the threshold that would trigger the US exit tax, i.e., being a US person for more than 8 of the past 15 years.
If he had waited too long to move back to Canada, he would have been subject to and may have had to pay tax on all his unrealized capital gains when relinquishing his green card.
With millions in appreciated stock, that could have meant paying several million dollars in tax.
The Solution: Time the Move Strategically
We worked with David to:
Verify he had not yet triggered the US exit tax threshold by confirming with a cross border accountant.
Relinquish his green card at the right time
Move back to Canada before selling any stock
Ensure future gains would only be taxable in Canada (from the date of Canadian tax residency forward).
Because he gave up his green card before becoming a covered expatriate (and because he hadn’t sold any stock), he had no obligation to pay US tax on the gains accrued during his time in the US.
Why This Worked
David had already built significant wealth, but the way we timed and structured his return saved him millions. Most people would not realize how quickly US tax obligations can become permanent unless one exits carefully and on time.
The Outcome: Millions in Tax Saved and a New Chapter Back in Canada
David is currently in the middle of his move back to Canada. His decision to return wasn’t purely financial. He wanted to raise his kids in Canada and felt his wealth gave him the freedom to do so.
Still, the tax savings were substantial.
He now owns millions in stock with no US tax obligation.
His capital gains will only be taxed on the appreciation from the date he became a Canadian resident forward, which greatly reduces his overall tax burden.
*The case studies and client examples presented on this website are for informational purposes only. Names and identifying details have been changed to protect client confidentiality. These examples are based on real scenarios but do not constitute financial advice. Individual circumstances vary, and you should consult a qualified financial advisor before making any financial decisions.