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Old Oct 29th 2009, 12:25 pm   #1
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Default Sold a house in UK - tax implications

I have just sold a house in UK. Have been in Canada for 6 years and own a house here. The UK house sold for a lot less than the purchase price (unsurprisingly). Can I claim this as a tax loss on my Canadian tax return?
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Old Oct 29th 2009, 12:49 pm   #2
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Default Re: Sold a house in UK - tax implications

Why?

House prices go up and down as do the decision to accept price so was your decision to accept so not sure if you can claim it as a loss
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Old Oct 29th 2009, 12:51 pm   #3
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Default Re: Sold a house in UK - tax implications

Its not the purchase price that matters, but its value on the day you Landed.

If you put a price on it with you immigration documents, or even better had a professional valuation done around the time you immigrated/Landed then that is the value you should use for tax purposes.
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Old Oct 29th 2009, 12:53 pm   #4
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Default Re: Sold a house in UK - tax implications

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Originally Posted by Silverdragon102 View Post
Why?

House prices go up and down as do the decision to accept price so was your decision to accept so not sure if you can claim it as a loss
Canada Revenue will accept a selling price, as long as its a valid transaction, they may question a sale to a family member or similar.
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Old Oct 29th 2009, 12:55 pm   #5
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Default Re: Sold a house in UK - tax implications

Remember that should they doubt a Buying, Selling or Valuation price, they may put in their own figure, and then it is up to you to prove them wrong.
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Old Oct 29th 2009, 1:01 pm   #6
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Default Re: Sold a house in UK - tax implications

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Originally Posted by MB-Realtor View Post
Remember that should they doubt a Buying, Selling or Valuation price, they may put in their own figure, and then it is up to you to prove them wrong.
Thanks Stewart,

It was my mother's house - she's now in a reitrement home. My sister and I owned it jointly for the past 5 years and have now sold it. Do I even need to tell CRA about it as I will realize less than $100,000 on my share of the sale?
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Old Oct 29th 2009, 1:30 pm   #7
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Default Re: Sold a house in UK - tax implications

On the day you became a Canadian resident for tax purposes you were deemed to have sold it and then immediately re-bought it. The value of the house on that day is the starting value.

The value on the day you sold it is the ending value.

The difference is your capital gain or loss. If you made a gain then you will pay tax on 50% of the difference.

Yes, you have to declare it to CRA. In fact, you should have been declaring it to CRA every year in the form that asks about your overseas property.

I'd suggest asking a valuer to give you a valuation of the property's worth on the day, 6 years ago, when you became a tax resident. As long as the sale was at arm's length CRA will probably accept your number.

I own a house in NZ and it's my plan to do just the above sometime before I sell it.

Note that if you've made a loss then that loss gets recorded on your tax record. If you subsequently make a capital gain on some other property then that gain is offset against your loss. Note that the capital loss is ring-fenced. You can't use it against your income; only against capital gain.
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Old Oct 29th 2009, 1:33 pm   #8
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Default Re: Sold a house in UK - tax implications

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Originally Posted by BobBrit View Post
Thanks Stewart,

It was my mother's house - she's now in a reitrement home. My sister and I owned it jointly for the past 5 years and have now sold it. Do I even need to tell CRA about it as I will realize less than $100,000 on my share of the sale?
I understood that if you own a house in the UK that a dependant of yours lives in then you don't have to pay capital gains tax in the UK, nor any tax in Canada as it was assets that you had told immigration about when you landed. I hope I'm not wrong here as the same will apply to us. MIL is living in our house in the UK.
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Old Oct 29th 2009, 1:36 pm   #9
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Default Re: Sold a house in UK - tax implications

UK I know nothing about. Canada I do. I'm not a tax accountant though.


Quote:
nor any tax in Canada as it was assets that you had told immigration about when you landed. I hope I'm not wrong here as the same will apply to us. MIL is living in our house in the UK.
'tis wrong - at least according to my understanding. :-( Immigration doesn't ask about overseas houses anyway.
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Old Oct 29th 2009, 1:39 pm   #10
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Default Re: Sold a house in UK - tax implications

As I understand it as well, it is the canadian value of the house .

So the value 6 years ago when you moved (converted to CAD dollars using rate on that day) and now one you have sold using the rate upon that day.

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Old Oct 29th 2009, 2:04 pm   #11
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Default Re: Sold a house in UK - tax implications

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Originally Posted by MB-Realtor View Post
Its not the purchase price that matters, but its value on the day you Landed.

If you put a price on it with you immigration documents, or even better had a professional valuation done around the time you immigrated/Landed then that is the value you should use for tax purposes.
We are planning to land during 2010 and return to the UK to finish renovating our property prior to selling up and moving over for good. The work we are doing should add a reasonable amount to the house value (we have consulted a local estate agent).

Am I right in thinking that we will have to pay 50% tax on the difference between the value at landing and the final sale value after work has been completed? I didn't think capital gains tax counted for your sole residency?

On a similar note - The amount of savings we will have (not including property sale) when we finally live in Canada should be more than we have when we land. Will this have tax implications as well?

Many thanks

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Old Oct 29th 2009, 2:19 pm   #12
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Default Re: Sold a house in UK - tax implications

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Originally Posted by fledermaus View Post
I understood that if you own a house in the UK that a dependant of yours lives in then you don't have to pay capital gains tax in the UK, nor any tax in Canada as it was assets that you had told immigration about when you landed. I hope I'm not wrong here as the same will apply to us. MIL is living in our house in the UK.
I think that this is just a little wonky
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Old Oct 29th 2009, 2:30 pm   #13
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Default Re: Sold a house in UK - tax implications

Markbev. It's the value when you become a resident for tax purposes. This is not the same as becoming a permanent resident. If you merely land, have a holiday and go straight back then you are not a tax resident. You'll become a tax resident when you move over here with the intention of living here (there is a formal definition of this but my simplification suffices). I believe that your own family residence is exempted as well.
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Old Oct 29th 2009, 2:46 pm   #14
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Default Re: Sold a house in UK - tax implications

Quote:
Originally Posted by ESarge View Post
Markbev. It's the value when you become a resident for tax purposes. This is not the same as becoming a permanent resident. If you merely land, have a holiday and go straight back then you are not a tax resident. You'll become a tax resident when you move over here with the intention of living here (there is a formal definition of this but my simplification suffices). I believe that your own family residence is exempted as well.
That is a little misleading. The value of the property at the point of landing, when compared to when the property is disposed of is relevant for calculating the capital gain obtained. That has nothing to do with tax resident status. Of course, one will only become liable for capital gains tax in Canada once one becomes a resident for tax purposes. All rather academic as there is an exemption for principal residence as you have stated.
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Old Oct 29th 2009, 3:03 pm   #15
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Default Re: Sold a house in UK - tax implications

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Originally Posted by Almost Canadian View Post
I think that this is just a little wonky
Which bit wonky?

RESIDENCE PROVIDED FOR A DEPENDENT RELATIVE
In addition to the relief that may be due on disposal of your own residence, you may also be entitled to relief when you dispose of a residence which you have provided for a dependent relative.
But you cannot get relief for:
• any residence acquired after 5 April 1988, or
• any residence acquired before that date unless the conditions
for relief were met by that date.
The conditions for relief are:
• the dependent relative must occupy the dwelling-house rent
free and without any other consideration
• only one dependant's dwelling-house can qualify at any
one time
• a husband and wife or civil partners who are living together can
claim relief for only one such dwelling-house between them
• the dwelling-house must be the sole residence of the
dependent relative.
Who is a dependent relative?
Dependent relatives are:
• any relative of you or your spouse or civil partner who is
incapacitated by old age or infirmity from maintaining himself
or herself, or
• your own or your spouse's or civil partner's mother who,
whether or not incapacitated, is either widowed, or living apart
from her husband, or is a single woman in consequence of
dissolution or annulment of marriage.


All of those conditions apply to us.
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