Do I sell or let my house out when moving to Canada?!

The expected rental income will not cover the mortgage and the increase in rate that the mortgage company want for letting it out :curse:

I could probably cover the difference myself, however this could mean a bit of penny pinching in Canada. In addition, interest rates are increasing, so this will mean that the difference between rental income and mortgage (variable rate) will also increase. Plus, of course, there is the risk of maintenance costs.

If I sell now, I have to pay a redemption penalty. However, if i keep the place, then sell in a year, I get stung for capital gains, and run the risk of tenants wrecking the place.

The advantages of renting are that if i decide to return to the UK I have somewhere to come back to, plus house prices will probably continue to rise, albeit less sharply than they have done in recent times.

Decisions decisions....

House prices are dropping in a lot of areas according to the recent stats I've seen, and interest rates are going up for quite some time; I'd sell and take the money.

I think you've pretty much covered it there. We're currently letting our properties in the UK, but that's in part because we're still only here on WPs so could theoretically be heading back to the UK. However I'm not convinced it's the best idea. From an investment point of view it's pretty risking - there are certainly safer options if you were to cash in. To an extent it depends how risk-averse you are.

The thing that decided it for us when landing any money brought into the country is tax free, but is you sell after a year and then bring the cash into Canada you will be taxed on it (I think).

we're selling

Sharon

No capital gains tax for at least three years if it was your own house before you rented it out.

You're welcome to pm me if you want to ask more questions.

That's in the UK. Won't you have to pay Canadian Capital Gains on it?

You will only have to pay tax on the increase (if any) of the value of the house between the date of landing and the date it is sold. Expenses etc can be offset against any gain.

HTH

Yep, I was reading it as OP thought they might have to pay CGT in the UK if they rented the house out.

As AC has mentioned, all assets are rebased once you move but the OP is right to think about tax in both the UK and Canada.

I'm not entirely sure Almost canadian and beehop are right about canada rebasing capital gains once you arrive. WHat you actually get is one year free of capital gains and then they ratio you on your capital gain, for example, if you owned a house for 5 years in uk and sold it after 2 years in canada you would be liable for 1 /7 capital gain. Its a subtle difference , bt quite an important one, espeiacilly if the market in UK remains flat for 2 years

Gryph

I'm happy to be corrected as I've never seriously looked at Canadian CGT.

UK CGT is covered in depth in the HMRC booklet CGT1, which is worth a read....