Muskoka

I've now been in Ontario for 18 months (just renting here) and working part time. Do have a car, so have insurance.

My house in the UK is not rented and I declared the UK house as my personal residence when submitting my Canadian tax return for 2014. All the bills (equal billing on everything) including cell, tv license, and utility bills still come out of my UK bank account. I kept everything ticking over in the UK in case I decided I wanted to go back, but have now committed to staying put in Canada.

I now want to sell my house and bring the funds over. Does anyone know please if CRS are going to tax me on the proceeds ? I wouldn't have thought so, as I declared my UK home as private residence, but I'm not sure. If anyone can throw any light on this, I'd be super grateful.

plasticcanuck

There will be no Canadian tax on sale of your UK property assuming you don't own another residence.

JonboyE

There could be.

plasticcanuck

Yes, I believe there could be tax on the difference amount between value of property when you left UK and value at sale date.

merryvi

As principle residence and the fact that you rented in Canada, then the proceeds from the sale of your UK home is tax free as it would be in the UK. You should advise your bank where the proceeds are coming from. Also as a second thought if you have RRSP room you may want to put $25,000 into an RRSP, get your tax break, and then use the Home Buyers Plan to put towards a deposit providing you are a first time house buyer which you seem to be. That said the HBP is repayable over 15 years.
Hope that helps, I did that when I transferred from the UK.

Muskoka

Thanks very much. I thought the Home Buyers Plan was only applicable if you'd never owned a house worldwide.

Pretty spooky - lot of money in my eyes to transfer over, can only hope they dont sting me for any tax. Wouldnt be paying tax in the UK if I was selling up and staying there, so hopefully now I've decided to definitely stay I wont be stung by Canadian tax

JonboyE

This is just wrong.

For Canadian tax purposes a principal residence does not need to be in Canada but to qualify the taxpayer must own the home and they must have lived in the home during the year. The OP says they have been in Canada for 18 months so they cannot have lived in the house in 2015 so there must be a tax consequence.

The general rule of all capital assets is that you are deemed to have disposed of them, and subsequently reacquired them, at fair market value on the day you become tax-resident in Canada. This becomes your tax cost in Canada and any subsequent gain or loss is calculated from this.

HGerchikov

To the OP, as often happens, you are getting conflicting advice on here. If I was you I would pay attention to JonboyE. He knows what he is talking about.

Muskoka

So my options are: return to the UK and live in my house for an unknown period of time......

Or, inflate the Canadian tax revenue's pocket, which I categorically am not prepared to do. I've been really roughing it here (renting a room only), whilst covering my bills/utilities/etc on my UK home.

I wonder how long I would have to 'live in my UK home'? Know Jon Boy seems to be the tax expert on here and I'm forever grateful for his and others advise. Is there any other avenue I can go? Means I would have to throw my job in, which I really enjoy and basically start all over again after I had put in my 'live in UK' time again. And work where I am is darned difficult to come by. I'm way north of TO. Is it worth speaking to CRA? or are they not going to be very clear on my position?? Thanks all in advance

christmasoompa

'Merryvj', in case you haven't seen the delete message on your other posts, I would ask you to please re-read the Site Rules, particularly Rule 9. You are very welcome to join in the forum, but please note that as per that rule you may not 'direct anybody to your services' or do any advertising at all.

Thx.

Aviator

• Pay attention to what Jon tells you, this is the right answer.
• Make sure you file a T1135 with your 2105 return. Expensive to forget.
• Not sure why you want to live in Canada, but not pay tax on a capital gain? We all have to do this one way or another. I wonder what is cheaper, paying the tax, or leaving your job and moving back to the UK to avoid the tax?
• Get professional advice. This can be very cost effective.

Muskoka

Thank you. Difficult to know where to go to get the professional advice i.e. local accountant likely wouldnt have a clue. I did ask a TO accountant who thought this wasnt an issue, hence very confusing for the lay person such as myself. I do have dual nationality, which is of course a huge help. Leaving my job and returning to UK for a short period is way, way cheaper, just means I lose a job I love. Have no issue getting professional advice and paying for it.............but who/where.... tried that with TO accountant.....seems like that was wrong.

JonboyE

If you return to the UK within 5 years of moving to Canada you would have no Canadian tax liability on any increase in value of your UK property.

I am going to start moralizing a bit. You say you have been in Canada for 18 months, and seem to want to stay, yet you don't want to pay your share towards maintaining the country you have chosen to live in. You expect the rest of us to pay your share? That is not on really, is it?

You will have to make the choice. Live and work in Canada, or go back to the UK and save a bit of tax.

They are not going to tell you anything different.

I do not see a way around it if you want to stay in Canada. Tax is potentially due on a sale of your UK property. Have you worked out how much the tax will be? It might be less that you are fearing.

HGerchikov

Are you sure its cheaper? JonboyE - please correct me if I am wrong, but its my understanding that you will be liable for capital gains tax on half the gain in value of the property since it stopped being you primary residence - so however much more your house is worth now than it was 18 months ago when you moved here. So if you property value has increased by $20k in the past 18 months then you would be liable to pay whatever your tax rate is on $10k, so, for example if you pay tax at a rate of 25% then you would pay $2500. You don't pay it on the whole value of the property.

Don't rely on this until JonboyE confirms - its my understanding and is likely over simplified.

Aviator

Pretty much sums it up.
Can you avoid capital gains tax? - MoneySense
The only difference would be the value in CAD at the time of becoming tax resident to the amount it is sold for, also in CAD. If the money is brought into Canada, the FX rate is what you actually received. If the money is held in foreign funds, use the BOC FX rate for both conversions, as prevailed on the day of landing and the day of the transaction. The BOC history goes back 10 years.

Any deemed disposition value would need to be proven, an estate agents letter should help here. CRA would rarely take the tax payers own estimate.

Tax rate is ones marginal rate and any income could push one into a higher tax bracket, so planning can be helpful.

Any accountant should be able to help, they don't have to be a foreign tax expert. A capital gain is the same no matter how it is derived.

I seriously doubt moving countries is going to be cheaper than paying the tax, it could turn out way more expensive.