Income tax for UK landlords when living in Canada
Apr 18th 2018, 3:52 pm
#1
Forum Regular
Thread Starter
Joined: Feb 2017
Posts: 49
Income tax for UK landlords when living in Canada
Hello,
Are there any other British landlords out there living in Canada who have advice about renting property when living abroad or a decent accountant who understands Canadian tax laws?
Thanks in advance,
Oli.
Are there any other British landlords out there living in Canada who have advice about renting property when living abroad or a decent accountant who understands Canadian tax laws?
Thanks in advance,
Oli.
Apr 18th 2018, 5:58 pm
#2
Joined: Sep 2008
Posts: 12,830
Re: Income tax for UK landlords when living in Canada
Canada is a big country, where in Canada do you want an accountant. Pretty much all Canadian accountants understand Canadian tax laws.
Apr 19th 2018, 10:52 pm
#3
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Thread Starter
Joined: Feb 2017
Posts: 49
Re: Income tax for UK landlords when living in Canada
I realise now my question could have been clearer. I am looking for a British accountant to deal with looking after the income from the rental of my London flat when I move to Canada in 6 weeks. Preferably an accountant who deals with Canadian tax too, so they will be able to advise me about tax on both sides of the pond.
Thanks,
Oli.
Apr 19th 2018, 11:58 pm
#4
Grumpy Know-it-all
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: Income tax for UK landlords when living in Canada
You pay taxes in both countries, reporting rental income from the UK on a T1 pretty straightforward at least to begin with. You claim a foreign tax credit for the UK income tax on form T2209, effectively you end up paying whichever is higher. In the UK you file a non-resident return and your tax code is non-resident, what forms you fill in exactly I'm not sure but I assume it's a self-assessment return.
Very important to have filed a P85 with HMRC when you emigrate.
The real problem comes from capital gains. Say you get £1,000 a month and then you spend £5,000 on maintenance. The income is x amount in CAD based on the exchange rate that month and the £5,000 you spent may have experienced a capital gain (or loss) in the time it was sitting in your UK bank account. So then you have to apply that expense to the cost base of the house in CAD.
After awhile it gets to be a very complex calculation, because everything has to be expressed in CAD on your T1.
The solution is to stick it in a corporation, then it's legally separate from you, but that's a pain for only one property.
Very important to have filed a P85 with HMRC when you emigrate.
The real problem comes from capital gains. Say you get £1,000 a month and then you spend £5,000 on maintenance. The income is x amount in CAD based on the exchange rate that month and the £5,000 you spent may have experienced a capital gain (or loss) in the time it was sitting in your UK bank account. So then you have to apply that expense to the cost base of the house in CAD.
After awhile it gets to be a very complex calculation, because everything has to be expressed in CAD on your T1.
The solution is to stick it in a corporation, then it's legally separate from you, but that's a pain for only one property.
Apr 24th 2018, 11:10 pm
#5
Grumpy Know-it-all
Joined: Jul 2010
Location: Calgary, Alberta
Posts: 8,928
Re: Income tax for UK landlords when living in Canada
Actually that's not a very good example, say £5,000 on some sort of improvement, "maintenance" is a bit vague. You put in double-glazing.
Apr 25th 2018, 12:50 am
#6
Joined: Sep 2008
Posts: 12,830
Re: Income tax for UK landlords when living in Canada
Maintenance is expensed, like repairing the bathroom or replacing a toilet, painting and fixing a broken window. Double glazing, new roof, new bathroom, these are capital improvements, for which one would claim CCAs and not expense.
