My understanding is that the US does not recognize deemed sales, but gives you the option to recognize them under terms of the tax treaty if you elect to do so:
"[w]here at any time an individual is treated for the purposes of taxation by a Contracting State as having alienated a property and is taxed in that State by reason thereof and the domestic law of the other Contracting State at such time defers (but does not forgive) taxation, that individual may elect in his annual return of income for the year of such alienation to be liable to tax in the other Contracting State in that year as if he had, immediately before that time, sold and repurchased such property for an amount equal to its fair market value at that time."
It is not in our interest to recognize the sale as we may never sell the property, it is not a principal residence in the eyes of the US but was one for about half the time in Canada (so the Canadian tax will be significantly lower), and we live in NYS where we will pay a heavy tax burden for the sale if we recognize it. So our plan is to postpone any taxes in the US until one day when we actually sell the property and may be living somewhere cheaper.
But we still have to report the last round of rent we received, Also fwiw, this is change of use deemed sale, without emigration.
thanks
