Muskoka

Hi
I am Canadian, have a house paid for in U.K., currently rented out. I'm living in Muskoka & loving it as always. Guess I'm a scardey cat of making the final jump. Does it make any sense to rent out my U.K. property, get mortgage against my U.K. property (which rented income would cover), and buy house in Muskoka outright to live in Muskoka....? sorry, bit garbled

Wondering how the tax situation would work? I guess the mortgage on the U.K. property could be claimed against tax payable in U.K. on rent, but would I pay tax in U.K. on rental income or in Ontario? bit confusing. Any thoughts/advice much appreicated. Thanks

Aviator

Mortgage interest only is deductible against tax and legitimate maintenance costs. The mortgage must be for the purchase of the property in the UK or tied to it. It cannot be for the purchase of a Canadian property, secured against another property if you wish to claim the tax deduction.

Income and expenses would be reported wherever you are a tax resident, if in Canada then to CRA. Presumably you had a valuation done for when you took up tax residency in Canada? The difference between this (in CDN$) and what you sell it for is also taxable as a capital gain (50% of gain taxable at your marginal rate).

JAJ

If you're mortgage free, then why would you want to go back to having a mortgage?