Snowbird bookkeeping: the records your US home needs long before you sell it

Personal does not mean paperless

Nothing about your Florida or Arizona home is deductible while you simply live in it, and that is exactly why people stop keeping records — then pay for it at sale. Both tax outcomes that eventually matter are computed from documents: your capital gain (in two currencies, on two returns) depends on a provable cost base, and your US tax-residency status depends on a provable day count. We treat snowbird bookkeeping as maintaining a small set of permanent files rather than monthly ledgers, reviewed once a year so nothing drifts.

Your adjusted cost base lives in Canadian dollars

The CRA will compute your gain in CAD using the exchange rate on the day you bought and the day you sell — so a flat US-dollar sale can still produce a large Canadian gain purely from currency movement. We build the ACB file from the original closing statement: purchase price, land-transfer costs, legal fees, and inspection costs, each translated at the transaction-date rate, then updated for every capital improvement at the rate on the day you paid. The parallel US basis runs in USD for the eventual 1040-NR. Two currencies, one source file, no year-of-sale archaeology.

Ownership structure gets baked into the same file. Spouses who hold the home jointly each have their own share of ACB and will each report their share of the gain, so we track contributions per owner from the start — including who actually funded the deposit and the improvements. Untangling that in the year of sale, across two decades of statements, is the expensive version.

The improvement file that pays off at the 8288-B

When a Canadian sells US real estate, the buyer generally must withhold 15% of the gross price under FIRPTA — unless a Form 8288-B withholding-certificate application shows your actual tax is less. That application succeeds on documentation: closing statements plus an organized record of capital improvements. So we keep the file the IRS will want to see, contemporaneously:

• Capital improvements — new roof, impact windows, kitchen renovation, HVAC replacement, dock or seawall work — invoice, proof of payment, and date, each raising basis and ACB.
• Repairs and maintenance — pest control, repainting, pool service — logged separately, because they never touch basis and mixing them in weakens the whole file.
• Special assessments — condo and HOA capital assessments often qualify as improvements; the assessment notice goes in the file too.

The day-count log behind Form 8840

Most snowbirds who winter in the US meet the substantial presence test, because the formula counts this year's days plus one-third of last year's plus one-sixth of the year before. Staying under 183 actual days and filing Form 8840 by June 15 claims the closer-connection exception — but only if you can substantiate the count. We keep a simple travel log of every entry and exit and reconcile it annually against your CBP I-94 travel history, because your log and the border's records should never disagree. Each spouse files their own Form 8840, so the log tracks each traveller separately — one partner's extra golf trip can put the two of you in different positions. The same log serves your provincial health coverage rules and your travel-insurance day limits, which fail at different thresholds than the IRS test.

Expense logs and the quiet exceptions

We still log property tax, HOA dues, insurance, and utilities even though none of it is deductible today. The log shows what the home truly costs in CAD each winter, supports insurance and estate files, and becomes the opening dataset if you ever rent the place out — at which point everything changes: the property becomes T1135-reportable, rental income triggers filings in both countries, and the books shift to a full US rental ledger. A purely personal-use US home, by contrast, does not belong on Form T1135 at all. For the tax strategy around holding, renting, and selling — including whether a principal-residence designation could ever apply — see our snowbird US property tax guide.

Source: IRS — About Form 8840, Closer Connection Exception Statement.