Goodbye Canada Hello Capital Gains Tax
#31
Re: Goodbye Canada Hello Capital Gains Tax
Anyway, the numbers are just an example, it's the principle of the valuation/exchange rate and documented refurb costs being offset against CGT to make a capital loss, and therefore a rebate against income tax paid, that I'm really interested to know.
#32
Re: Goodbye Canada Hello Capital Gains Tax
But you'd never do that, oh no.
Edit: thinking about it, I wonder if you'd need to use the exchange rates for the time(s) the improvements were done. Dunno.
#33
Binned by Muderators
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
Re: Goodbye Canada Hello Capital Gains Tax
Jon, what do you make of this? (values for illustrative purposes only)
2007 - became tax resident in Canada. UK property worth GBP300,000. At 2007 exchange rate (2.20) this is worth $660,000.
2014 - leaves Canada. UK property worth GBP350,000, plus had GBP100,000 of refurbishment. At 2014 exchange rates (1.80) that's $630,000 value plus $180,000 refurbishment.
Could I claim a capital loss from 2007 to 2014 of:
$660,000 less ($630,000 + $180,000) = -$150,000?
2007 - became tax resident in Canada. UK property worth GBP300,000. At 2007 exchange rate (2.20) this is worth $660,000.
2014 - leaves Canada. UK property worth GBP350,000, plus had GBP100,000 of refurbishment. At 2014 exchange rates (1.80) that's $630,000 value plus $180,000 refurbishment.
Could I claim a capital loss from 2007 to 2014 of:
$660,000 less ($630,000 + $180,000) = -$150,000?
Original tax cost £300,000 @ 2.2 = $660,000
Additional cost £100,000 @ 1.8 = $180,000.
On paper a $210,000 capital loss. (50% allowable.)
Spending £100,000 to achieve a £50,000 increase in market value might cause someone to take notice.
Is the house in joint names with Mrs. Jingsamichty? If so, you would put half on your tax return. Did Mrs. Jingsamichty and children live in the house for some of this time?
Most importantly, you can only claim capital losses against capital gains this year or any of the three preceding years. If you haven't paid tax on capital gains then there is no refund to be had. (You can carry capital losses forward indefinitely but if you are leaving this is not much use.)
#34
Binned by Muderators
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
Re: Goodbye Canada Hello Capital Gains Tax
Yes.
#35
Re: Goodbye Canada Hello Capital Gains Tax
Jonboy, the font of all tax knowledge, I thankee.
It was a largely hypothetical question, the UK housing market has of course meant that house prices have risen a lot more than my example- even in Norfolk, Novo! I was more curious to see whether the exchange rate fluctuation and refurb costs alone could negate a potential capital gain, and it would seem they can.
All irrelevant in my case as I have never paid any CGT so have nothing to offset a Capital Loss against anyway. Now, if you could offset it against Income Tax, I'd have been very interested...
Something for the OP to consider though, before she writes the cheque.
It was a largely hypothetical question, the UK housing market has of course meant that house prices have risen a lot more than my example- even in Norfolk, Novo! I was more curious to see whether the exchange rate fluctuation and refurb costs alone could negate a potential capital gain, and it would seem they can.
All irrelevant in my case as I have never paid any CGT so have nothing to offset a Capital Loss against anyway. Now, if you could offset it against Income Tax, I'd have been very interested...
Something for the OP to consider though, before she writes the cheque.
#36
Re: Goodbye Canada Hello Capital Gains Tax
Jonboy, the font of all tax knowledge, I thankee.
It was a largely hypothetical question, the UK housing market has of course meant that house prices have risen a lot more than my example- even in Norfolk, Novo! I was more curious to see whether the exchange rate fluctuation and refurb costs alone could negate a potential capital gain, and it would seem they can.
All irrelevant in my case as I have never paid any CGT so have nothing to offset a Capital Loss against anyway. Now, if you could offset it against Income Tax, I'd have been very interested...
Something for the OP to consider though, before she writes the cheque.
It was a largely hypothetical question, the UK housing market has of course meant that house prices have risen a lot more than my example- even in Norfolk, Novo! I was more curious to see whether the exchange rate fluctuation and refurb costs alone could negate a potential capital gain, and it would seem they can.
All irrelevant in my case as I have never paid any CGT so have nothing to offset a Capital Loss against anyway. Now, if you could offset it against Income Tax, I'd have been very interested...
Something for the OP to consider though, before she writes the cheque.
Edit: But since we perhaps have Jon's attention at the moment, do I have any CGT exposure on my soon-to-be retirement home in France? I paid cash for it in 2008 and will be leaving Canada next year. I doubt it's increased in value at all, except for renovations we've done. But should I get it revalued before we leave? I was tax resident in Canada when we bought it, it's never been rented and I haven't reported it on T1135 because it is property for personal use.
Last edited by Novocastrian; Mar 30th 2014 at 10:20 pm.
#37
Binned by Muderators
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
Re: Goodbye Canada Hello Capital Gains Tax
Yea, that's the catch. A CG loss doesn't equate to a refund, just to an offset against other CGT.
Edit: But since we perhaps have Jon's attention at the moment, do I have any CGT exposure on my soon-to-be retirement home in France? I paid cash for it in 2008 and will be leaving Canada next year. I doubt it's increased in value at all, except for renovations we've done. But should I get it revalued before we leave? I was tax resident in Canada when we bought it, it's never been rented and I haven't reported it on T1135 because it is property for personal use.
Edit: But since we perhaps have Jon's attention at the moment, do I have any CGT exposure on my soon-to-be retirement home in France? I paid cash for it in 2008 and will be leaving Canada next year. I doubt it's increased in value at all, except for renovations we've done. But should I get it revalued before we leave? I was tax resident in Canada when we bought it, it's never been rented and I haven't reported it on T1135 because it is property for personal use.
#38
Re: Goodbye Canada Hello Capital Gains Tax
OK, but since qualified surveyors are not a French breed, I'll talk to M. Gosselin, the agent immobilier this summer.
#39
Forum Regular
Joined: Aug 2010
Posts: 251
Re: Goodbye Canada Hello Capital Gains Tax
Just a thought but exchange rate in 2002 was 2.25CAD$ to the pound and is now 1.85 so 40c lower. It would be possible to demonstrate an appreciation or gain in value of the asset but a loss when converted to CAD$ in whihc any CGT must be paid. Hence potetnially a refund would be owing as you have paid tax in CAD$ on rental income during that period. It seems to me you have been incredibly honest - I simply would not have declared income earned abroad - CRA isn't much brighter than HMRC.
#40
Re: Goodbye Canada Hello Capital Gains Tax
I got audited within 3 months of arriving in Canada and starting a business here. CRA can be very thorough.
#41
Re: Goodbye Canada Hello Capital Gains Tax
Just a thought but exchange rate in 2002 was 2.25CAD$ to the pound and is now 1.85 so 40c lower. It would be possible to demonstrate an appreciation or gain in value of the asset but a loss when converted to CAD$ in whihc any CGT must be paid. Hence potetnially a refund would be owing as you have paid tax in CAD$ on rental income during that period. It seems to me you have been incredibly honest - I simply would not have declared income earned abroad - CRA isn't much brighter than HMRC.
#43
Forum Regular
Joined: Aug 2010
Posts: 251
Re: Goodbye Canada Hello Capital Gains Tax
CRA can't audit an asset held overseas. Grow up and get off your high horse.
I'm aware income taxes aren't related to CGT but the income derived from the asset was derived in UK currency so the argument is linear in demonstrating that any "gain" would also be in UK pounds so the conversion might incur a loss by itself. Next week I'll show you how to lace your shoes.
I'm aware income taxes aren't related to CGT but the income derived from the asset was derived in UK currency so the argument is linear in demonstrating that any "gain" would also be in UK pounds so the conversion might incur a loss by itself. Next week I'll show you how to lace your shoes.
#44
Re: Goodbye Canada Hello Capital Gains Tax
CRA can't audit an asset held overseas. Grow up and get off your high horse.
I'm aware income taxes aren't related to CGT but the income derived from the asset was derived in UK currency so the argument is linear in demonstrating that any "gain" would also be in UK pounds so the conversion might incur a loss by itself. Next week I'll show you how to lace your shoes.
I'm aware income taxes aren't related to CGT but the income derived from the asset was derived in UK currency so the argument is linear in demonstrating that any "gain" would also be in UK pounds so the conversion might incur a loss by itself. Next week I'll show you how to lace your shoes.
Obviously you need to report your worldwide income to the CRA, converted to Canadian dollars. Do not assume that CRA will not check out the source of that income.
Or, if you like, assume they won't. I don't GAF.
#45
Re: Goodbye Canada Hello Capital Gains Tax
CRA can't audit an asset held overseas. Grow up and get off your high horse.
I'm aware income taxes aren't related to CGT but the income derived from the asset was derived in UK currency so the argument is linear in demonstrating that any "gain" would also be in UK pounds so the conversion might incur a loss by itself. Next week I'll show you how to lace your shoes.
I'm aware income taxes aren't related to CGT but the income derived from the asset was derived in UK currency so the argument is linear in demonstrating that any "gain" would also be in UK pounds so the conversion might incur a loss by itself. Next week I'll show you how to lace your shoes.
I hope you wear slip-ons.