gillan85

PR submitted and received by CIO sydney June 27th 2011...for FSW with AEO

We have approx £220,000.00 equity in house.
£35,000.00 in investments.

Please can somebody advise us as to going about our finances before we leave the UK. All we know at the moment if we are fortunate enough to gain PR we would want to rent for at least six months to one year. I am asking this purely because of the poor exchange rates at the moment. Please can someone give sound straight advice. Thanks in advance.

Aviator

• Contact a licensed financial adviser who knows your circumstances.
• Get a valuation on the house as near your departure date as possible. Convert it to CDN$ on the day of your arrival. You need Bank of Canada rate, not retail FX rate.
• Get valuation on investments, again in CDN$
• Any gains in value after you become tax residents are reportable and taxable
• Don't forget to report any foreign assets valued at $100k or more on your 1st Canadian tax return

gillan85

Thanks Aviator that has helped.....so I suppose what I am really asking is that if we do not rely on house sale to move....is there much difference in selling and exchanging all monies (albeit possibly at a lower rate) before landing or not selling and obtaining a valuation(like you mentioned) in the hope that rates may increase slightly and selling say a year after at hopefully a better rate and paying the tax on the increase...do you think it is six and two threes...That is if I have understood that right..... its a bit of a mine field knowing what we ought to do or maybe not do.

Alan2005

How much do you think your house value will change?
How much do you think the exchange rate will change?

Knock up a spreadsheet that calculates some what if scenarios (say +/-5% house price value and +/-10% exchange rate movement) and work it out from there. In particular the worst case you think is possible and how much you want to avoid it.

fwiw - In your position, I'd wait till I got my PR confirmed and then sell the house, stick the proceeds in a few different accounts and then wait for a bit on the FX. But do your own research.

Aviator

It is a crap shoot. If I had such a crystal ball, I would not be sitting on GBP right now and would have bought AUS$ earlier in the year. You only know if it was the right choice after you have made it.

As Alan says, do a few scenarios and decide what is best for you. Prices going up in the UK (or down), prices changing in Canada, weigh up chances of FX changing. Ten to 20 years down the road, any fluctuations will seem less significant - It will, been there and done it. I paid $25k over the odds for a property that I wanted, at the time it seemed a high percentage of the value, now, it is an insignificant percentage.

gillan85

So what should we do if we decided to rent out our property until the time would be right to sell... we know we could obtain approx 800.00 per month in rental fees which is considerably more than our mortgage at the moment....but is there a time limit we could do this for without being penalised for tax in Canada ( if we were to rent whilst in Canada) ? Just struggling with this at the minute...

gillan85

First question.... why a few different accounts? and is there a time limit we would have to exchange after keeping an eye on FX ?

Alan2005

It's something like:

- You pay tax on the rental profit.
- You declare your foreign asset if it's over a certain amount ($100k?, I'm not actually sure)
- You pay tax on any FX/real estate gain that occurs after you become tax resident when you eventually sell.

Hopefully you'll get a more accurate answer from people that know about tax.

So you don't go over the governments £50,000 guarantee in any given account. If you've got £250k, you should split it up. The risk might be low, but I bet those people with ice-save accounts wish they'd done this.

No time limit - you just have to pay tax on any gain.

Aviator

You are pretty much right on. In BC the govt guarantee all Credit Union funds with no limit.

johnh009

And, of course, like the stock market, you can never pick the bottom and never pick the top, unless you are lucky.

Alan2005

Yeah, once they have their cad$, if they are coming to BC the best place for it is in a credit union. Otherwise $100k is Canada's federal guarantee limit for bank accounts.

Aviator

ING is useful for high interest () deposits and a CU for day to day.