eversmannx

I've read through many threads on this topic, but couldn't quite find anything related to "bump".
I am planning to rent out our main and only home while we move on a work permit, and intend to sell it after a year or so when we get the PR. i understand, we will have to pay capital gains tax on 50% of any gains from the day we move.

I had a 1 hour tax call sponsored by my employers, but i was completely blank at the time and didn't know all the right questions to ask and was completely lost in all the jargons... what i've written above seem clear and straight forward to me... but i have these notes on "bump" but can't work out the context for the life of me. i found a few articles by searching fair market value + bump, but they were too technical and couldn't quite workout how i can use it to my situation.

any advice/references please?

p.s. we are planning to travel during the holiday period, is it okay to do the appraisal a bit earlier?

Many Thanks

PMM

Hi

1, You should look into it further. The date you become a permanent resident is the valuation date of your property . From that date to the date you sell, the difference is the capital gain.

Siouxie

All and any property abroad is deemed disposed of on the date you become resident for tax purposes.. I presume 'bump' refers to having a higher assessment of the Fair Market Value of the overseas property, for when you become resident for tax purposes - so that if you then dispose of it and it's increased in value your CPT won't be as high.. but I would think you could be on very dodgy ground doing that - if Canada Revenue were to discover you had lied - tax evasion is a serious matter. I'm not sure it's legal for individuals (the explanation mentions business corporations etc.,)
https://www.canada.ca/en/revenue-age...rants.html#PBC
and https://www.canada.ca/en/revenue-age...rs-canada.html

Until it's sold you will also need to declare the house value if the house - combined with any other assets - is worth in excess of $100,000 - severe penalties for not doing so... plus declare your world income and pay taxes.
https://www.canada.ca/en/revenue-age...rms/t1135.html

explanation..: https://miningtaxcanada.com/wp-conte.../Bump20131.pdf (opens in new tab)

eversmannx

Thanks. I will be doing all the things you mentioned (T11-35 etc), and like you say, i don't want to do anything about the "bump" if it's not completely legit.

eversmannx

https://britishexpats.com/wiki/Tax_a...e_Sales-Canada

I've gone through the above wiki, and clear on the Canadian side of capital gains tax (if there is a gain), but the UK side is a little bit confusing to me... Could anyone give a simple example? for a basic scenario of renting your UK property after you move, and a realized gain of say 25k (although it's highly unlikely under current circumstance).
also, if the property you sell is the principal home in UK, in order to buy your main home in Canada, are you exempt? or is this what the rule changes in april 2020 is about...

Cheers

Awain

Gov.UK has a CGT calculator

https://www.gov.uk/tax-sell-property/work-out-your-gain

Answer the questions as if you have been living in Canada for 1 year or something and it will tell you how much you would need to pay. It's going to be a minimal amount though as the formula is based on time you've owned the property vs time you rented it out. You don't include the final 9 months before selling.

On the Canadian side, I wouldn't worry. Money Laundering is rife in Canada and the govt are happy to turn a blind eye!

Will_PA

Get the highest valuation you can. Tell them you want it high for tax purposes. Have the estate agent date the letter for roughly when you move to Canada.

This "value" is what gains are measured against in both tax systems. So get it as high as you reasonably can!