Hurlabrick

Just thinking up a 'Plan C' (already on Plan B!).

We have 'landed to activate PR' in April 2017 and are back in the UK selling up. The only thing now holding us in the UK and not sold is our house. The UK market has been weird what with ongoing BREXIT and the fall out from the ill-timed general election! Bottom line is we have come close, but have not yet sold. As you may recall, in the UK there is normally a 'spring' and 'autumn' selling season, so still hoping for a sale.

BUT, if we don't sell, we are thinking of 'landing as settlers' anyway in November, leaving the UK house still furnished and 'set' and hoping for a sale in Spring 2018. We will NOT be renting it out, just leaving it unoccupied (UK offspring can check on it).

I know about getting a valuation at the point we move to Canada, and liability to Canadian CGT etc. on any gain from the point of our landing as settlers, but I don't expect any house price inflation - I will just be glad to sell for the current estimate in a hopefully more active market!

My question/s is/are, are there any gotcha's or implications to doing this? It is (was) our primary UK residence, so should be no UK tax on the proceeds? A lot of equity in it (own it outright), so would there be any liability to Canadian tax? We would transfer the proceeds as soon as available.

Snowy560

I know you are very resourceful and think you should explore these pages. Don't forget to report the sale to HMRC within 30 days:

https://www.gov.uk/tax-live-abroad-sell-uk-home/overview

I found these pages very helpful in 2015 but there have been changes plus our situation was slightly different as we sold so close to when the rules changed whereas I think if you sell more than 18 months after April 2015 things could be different. Perhaps not in your case as it will have been your principal residence etc.

Hurlabrick

Thanks for that.

Errr.... that one had slipped by me I confess - OK, no biggie - will do that.

I would of course be doing the P85 thing when I leave for good and including a covering letter explaining what I am doing in 'plain English'. I have other stuff going on around withdrawals from my Income Drawdown and 'NT' tax codes etc. but this post is really just around our house conundrum!

Aviator

FX comes into play. Valuation at time of landing converted to CAD is the base cost. Sale price, converted to CAD is the gain, if any. If you hold GBP and there is an increase in the CAD you get, a capital gain exists.

Not sure how UK CGT applies with the new rules, if you live in Canada and have a residence here, rented or owned, the UK house is not a primary residence.
https://www.gov.uk/tax-live-abroad-s...-home/overview

Make sure you file a T1135 as well if you hold the property.

Snowy560

Yes. We didn't pay CGT in the UK ... but had to in Canada. Anyway, there is a reciprocal tax agreement so you won't pay twice.

It's easy to miss the point about reporting the sale within 30 days ... we did and had to grovel to HMRC.

Novocastrian

I believe that if the UK house is not rented out, it will qualify for exemption from the need to mention it in a T1135 as it is a cottage or other dwelling for the sole use of the proprietor.

I know nothing of new CGT UK rules in these circumstances.

Hurlabrick

We will not be renting it out - that is certain.

I will get a formal valuation at the point we go non-resident (current estate agent will oblige). But with UK house price inflation, I am not expecting any rise in the space of a few months, so no capital gain from the point I leave to the point of sale - if there is any, I would be delighted to pay tax on the gain!

Also I would be delighted to pay CGT on any FOREX gain - what with the £GBP in the toilet against the $CAD!

Aviator

Could be the case, but the OP should be sure to comply where necessary, the penalties for not filing are severe.

Novocastrian

Agreed that it is to be taken seriously. I have the impression though that Hurlabrick is not an un-serious person.

Snowy560

Why wouldn't you mention property on T1135?

It's income and assets though you can do a simplified one if under $250,000 (I think).

https://www.canada.ca/en/revenue-age...statement.html

Hurlabrick

I am definitely 'serious' about this stuff, but very 'unserious' socially!!

I do my own UK tax returns (TaxCalc is the b*ll*cks!). BUT, I will have my Canadian financial adviser do my Canadian tax returns (he is also my cousin).

Novocastrian

From your link, in Section A, third box down: Property other than for personal use...

However, I'm two years out of date with Canadian tax returns: the limit for T1135 filing used to be $100K in my day. I filed it ever since it came out because I've had assets over that amount all that time, but I never mentioned my house in France, which was for personal use only. I always thought it quaint that the old wording was "a cottage or other property".

Shakyuk

I have wrote this reply in this thread as Hurla may also want to know the answer, but if you prefer me to start my own then I'm happy to do so


Very interesting thread, this board really is a wealth of knowledge. When I come to Canada, I will transfer £15-20k but in the UK I'll have:

• A UK bank account
• My house which I'll rent out
• An Investment ISA and cash ISA

The T1135 form looks applicable because I'll be renting my property out and thus it isn't for personal use. It looks like this will also mean I have to declare the funds in my UK bank account? Is that correct?

I hold a number of shares, funds, bonds in my investment ISA, this is where my main confusion comes.


Would I just list the value of the portfolio under the 'funds held outside Canada' or would I list this under 'shares of non-resident corporations'?


If under the non-resident corporations would this need to be individually listed or would it just be a listing of the portfolio value?

Snowy560

You don't have to fill in a t1135 the 1st year you're here. I've filed one every year after that. My husband did the simplified one this year but I did the full one. I know what people say about h&r block but we have someone in particular we see there and she is excellent. She does a lot of US tax filing and is always busy. We used a "proper" accountant the house sale year to ensure we got the Canadian CGT right. They did get it right but were no better than our woman at H&R (worse customer service) so we went back to her this year.

We sought CGT advice from a UK accountant the year we sold the house (telephone consult).

We did the self assessment tax return for HMRC ourselves the house sale year.
When it came to the house sale on the forms the calculations completely floored me. So HMRC got a "tax technician" to call me back (5am on a Saturday!). He told how to complete the forms.

HMRC have now officially let me off self assessment filing and sent me a letter to confirm this.

glendem4

Hurlabrick....we are going to be in similar situation shortly. I will be "landing" in September 2017 and plan to move to Ontario in May 2018. We will look to put the house on the market in Spring 2018 to sell. Properties were going within a week in Bournemouth between March-June 2017, but the market has stalled in the last 2 months with very few sales completing.

I have to "land" BEFORE June 2018. Would it make sense to delay my "landing" until next year when we know about the house situation? What are the Pros and Cons for "landing" early. If we "land" now, the 9 months before we move will eat into the time I have to be resident in Canada to retain my PR. Current rules dictate being present for 730 days within any 5 year period.

The other concern is the current exchange rate. I've no idea how "Brexit" will affect the exchange rate. With all the uncertainty, I can see the £ falling further to $1.50.

Opinions, please?