BenandJerry

If you have a foreign property rented but make no income from it do you have to claim on Cdn tax forms?

Auld Yin

Yes, but you're also permitted to declare the relevant expenses.

JonboyE

Just to clarify what Auld Yin has said, you should put the rental loss on your tax return. Remember that the income or loss is calculated using mortgage interest paid - not necessarily the total mortgage payment. If the rental does make a loss you don't have to put this on your tax return. The CRA don't mind it you choose to pay more tax than you need to.

However, apart for the year you first become tax-resident in Canada, you must complete a T1135 form and mail it to the International Tax Services Office before April 30th or you can be fined up to $2,500 a year.

TheCanary

My husband is moving to Toronto in May, so the first time he declares what properties and income he has had after May 2011 is next year April 2012 when the taxes are declared. Is this correct?

JonboyE

Yes.

FlirtyKnickers

Taxes are filed March 1st to April 30th....he will need to file during this time 2012. After that date you can file but if you owe money you will be penalised, so your better being safe than sorry.

TheCanary

thank you, for the advise.

TheCanary

I have another query which i hope someone knows the answer to. We bought our house back in 1996 in the UK, so the value has obviously gone up since then. We are now residents of Canada, so what would happen if we sold our house in the uk with regards to taxes. Im sure we would have to pay some in the uk and some in Canada, can anyone clarify what taxes we will pay and where?

JonboyE

There is no tax to pay in the UK as long as it is sold within 3 years of you ceasing to occupy it as a principal residence, or if it is sold at least five years after you became non-resident in the UK.

In Canada, you are deemed to have purchased the house at its fair market value on the day you became tax-resident here. Therefore half the gain you made after this day is taxable.

TheCanary

We left england in 2000 to live in Spain and we have not sold it since becoming non-residents in the UK, its been over 5 years. Therefore what capital gains or taxes do we have to pay in UK in addition to Canada?

JonboyE

Nothing.

http://www.hmrc.gov.uk/cnr/faqs_capgains.htm#cg3

See Question 6 (ii).

TheCanary

Thanks for the link it really helped me understand.

MissyDan

Could someone please help with this scenario.

One has borrowed on one property to buy a second outright (and the second one is being rented out).

Can one still claim the mortgage interest being paid, even if there is no direct mortgage on the second property.

I hope this makes sense

JonboyE

Yes, this is OK. You can claim interest as a deduction as long as it is incurred to produce taxable income.

If necessary, you might have to show a money trail e.g. you mortgaged one house for $200,000 and shortly after purchased the rental property for $200,000.

Nifta

Hi JonboyE,

I find myself in a similar situation, so thought I'd add a post to this thread.

But first of all, this is my first tax return in Canada: I arrived from the UK on 30 January 2010. Do I even need to file a tax return this year? I'm not certain, as I didn't receive any forms (T1?) through the mail. My employer gave me a T4, but that's it.

With that question out of the way;

I'm renting out property that I still own in the UK, but I make a net loss on the rental.

Does this mean it's possible for me to reclaim some tax in my Canadian tax return? If so, how do I do this?

I'm using Turbo Tax and am finding it's not especially well configured for this situation. In the Foreign Income section it doesn't allow me to enter negative values. And the Rental Properties section seems relevant only for Canadian properties (it requests info about "Tax shelter identification #" etc, which doesn't seem relevant for a UK property). Should I declare it as a loss somewhere else. Any suggestions appreciated!

Other relevant information: I'm registered as a Non-resident landlord in the UK and receive rent with no tax deducted. It's a repayment mortgage, rather than interest-only.

Big thanks in advance for any assistance!

John