issy10

Hi all,
I have a few questions in regards to Capital gains tax, mainly do I pay in UK or Canada - so confused!!!
I have contacted HMRC several times and noone seems to be able to answer my question... 'an expert technician' was supposing to call me back - and nope noone ever called me!!! I asked if i was supposing to report the sale of my property but noone called me back. I do know I would need to file my taxes for 2015. Just wondering if there is anything else I'd need to do?!
Wondering if anyone has been in the same experience in terms of CGT on shared ownership properties or if anyone can help me out here...

My property in UK was sold in January. It was a shared ownership (2006) where I owned 75%, 25% was floating therefore no rent was paid whilst in my ownership. On selling the property with an Estate Agent, I sold it at 100% value. However I did have to pay the Housing Association their 25% share of the property value. Surprisingly my property made a profit.

I have a PR and living in Canada since 2011. Since living in Canada I have rented out my property.

So my questions are
1. Do I pay CGT in UK or Canada?
Where can I find more information?

2. How would the CGT be calculated as the Housing Association would have made a profit on their 25%. I calculated that they made $5 profit.

Thanks

Aviator

I don't clearly follow all your ownership arrangements, however you do say you mostly pay tax in the UK or Canada. If you have been in Canada since 2011, you are likely a Canadian tax resident. Therefore worldwide income must be reported in Canada and a claim for any foreign tax paid made on the tax form.

There are new CGT rules coming out in the UK for non resident owners in regard to CGT. Regardless, you would still report any capital gain in Canada to CRA and if you paid tax in the UK, claim that on your Canadian tax filing. You tax liability as a tax resident is to Canada. If you owned 75% of the property, 75% of the gain is attributable to you. You would also need to prove the distribution of funds and joint ownership of the property is requested to do so.

Also assuming you have been filing a T1135 T1135 - Foreign Income Verification Statement each year since you have been a tax resident.

issy10

Thanks for your reply.
I am filing taxes to HMRC every year. I'm also filing taxes here in Canada every year. Yes, T1135 has been filed every year.

So from what I understand, I would need to mention on both sides of the CGT and maybe taxed both sides?! even with the Double Taxation agreement?

Sorry, if it's a bit of a dumb question. I really have no idea.

JonboyE

If you disposed of a residential property in the UK, as a non-resident, prior to April 2015 there is no capital gains tax in the UK.

There will be tax in Canada. Your proceeds of disposition are the 75% you got to keep converted at the exchange rate in January 2015. Your cost base is what you paid for your 75% in 2006, converted at the exchange rate in 2006.

Oakvillian

which might end up working to your advantage: even if you made a significant capital gain in Sterling terms, it all gets unwound in the difference of exchange rates between then and now. You would have got $2.20 or so to the pound in 2006 - today, not so much!

dishwashing

Jonboy, isn't her cost base calculated at the time she became a tax resident in Canada? ie 2011?

JonboyE

Yes, my mistake.

dishwashing

Thanks Jonboy - I get confused too often so thanks for clarifying.

issy10

Thanks for the replies!!
Makes a bit more sense now.

Should I be telling UK HMRC about the sale of the property in Jan 2015 immediately, or should I just complete the self assessment tax forms before the deadlines?

I assume I file the Canadian Tax forms as per usual for 2015 within deadline.