sgbolt

Looking some some approx tax figures if i sold my uk house while living in Canada. I've been here 9 years. Would i be exempt from capital gains tax in uk but pay tax here - what would the rate be? Thanks

Hurlabrick

Yes, you would pay Canadian CGT, not UK.

HGerchikov

I am not an accountant but this is my understanding.
Was the house your primary residence until you moved here? If so then you will only be liable for CGT on the difference in value from when you moved here until now (not from when you bought it). Hopefully you got an appraisal before you left. If you didn't you may need to get an appraiser to appraise what the value would have been 9 years ago. CGT is paid at your usual rate on half of the gain.

Siouxie

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

Hurlabrick

….and of course it would be the values IN CAD at the point you moved to Canada vs the sale price now IN CAD.

BigCrunch

I’m in a bit of a similar situation in selling a house after landing. The family and I are landing in December and we expect to sell our house in up to a year from now. (Planned sale for December fell through and we plan to rent it out for awhile / rent in Canada in the interim).

So, Can I claim PRE?

UK side is straightforward as any taxable gain is likely to be small due to the last 9 months rule and having lived in the house full time for many years.
On the Canadian side, Brexit leaves a volatile GBP and gains could rack up. I’d read a four year exemption could be applied for to keep a house as PPR even if it is rented out and if you have no other owned property. But not sure if I can nominate the U.K. home as PPR - we won’t own property in Canada, and will have lived there continuously before arrival BUT I am wondering if the landing process cuts that linkage, or if it’s just there for tax calculation purposes.

I can’t post the URL to the guidance I’ve seen, as I have too few posts (Hi I’m new!)

I plan to get tax advice, but any thoughts and experience here would be useful to hear.

Siouxie

https://britishexpats.com/wiki/Tax_a...e_Sales-Canada
and
https://britishexpats.com/wiki/Category:Taxes-Canada

bairn7

PLEASE NOTE THAT YOU WILL PAY TAX AND HAVE TO FILE A RETURN IN THE UK - the wikis above are slightly out of date.

Since 2016, non-residents who dispose of UK residential property are subject to non-resident capital gains tax in the UK. Please note that you will be required to file a return with HMRC within 30 DAYS of the completion of the sale, even if you have no tax to pay. Failure to do so will result in late filing penalties. More info can be found here: https://www.gov.uk/guidance/capital-...ntial-property.

In terms of calculating any gain (provided you are non-UK resident at the time of sale):

• Only the gain arising since April 2016 will be subject to NRCGT. You can either obtain a valuation at April 2016 and calculate the gain since then, or you can calculate the full gain arising during your ownership and time apportion it, with only the portion applying to April 2016 onwards being taxable.
• Assuming the house was your former home, you can claim an exemption for the gain attributable to the final 18 months, therefore essentially only the gain arising between April 2016 and 18 months before you sell the property will be subject to NRCGT. Note that this 18 month exemption is being reduced to just the final 9 months from April 2020.
• If the property has been let whilst in Canada, you can claim a further exemption for all or part of the gain arising during the let period. Note however that this exemption is being removed in April 2020 so you may wish to give thought to a sale prior to April 2020 if this is a relevant issue for you.
• Depending on the size of the gain, and any other UK income, the gain will be subject to NRCGT of 18% and, if large enough, part may be subject to NRCGT of 28%.
• Any tax suffered in the UK can be offset against Canadian tax suffered on the same transaction under the terms of the double tax treaty.

CGT on private homes in the UK is about to undergo huge changes in April 2020 and many UK residents thinking of selling their home are having illustrative calculations prepared to decide whether to sell before or after the changes come into force.

The important thing to remember is your obligation to file a return within 30 days of completion of the sale as, in my experience, most non-residents overlook this and conveyancers don't tend to raise the issue at the time.

Happy to help if you have further queries.

christmasoompa

If you have the time to update them, we'd be eternally grateful. I'm afraid I'm going to have to snip your post a bit, it's super helpful (for which many thanks), but as per site rule 9 you can't direct anybody to your services, hope you understand.

bairn7

No problem! Wasn't 100% sure it was allowed to mention that. This stuff is my bread and butter so happy to answer any questions on here or through PM.

And I'll try to update the Wiki as best I can when I get the opportunity!

BigCrunch

thanks, but my concern is more over being taxed by the Canadian taxman. U.K. liability will be nil to negligible as it’s been our Principle residence for a long time so any fractions will be low, etc.

e.g we move and have it assessed as fair value of (e.g.) £500,000 on landing at FX of 1.6, but then sell in a year at £500,000 at an FX on date of 1.8. We would have a $100k gain that is open to tax. Right? Would be nice to minimise that exposure or know it doesn’t exist.

bairn7

I was replying to the OP and not your subsequent post as you seem to be aware of the UK implications. Just keep in mind the 30 day filing/payment requirement in the UK!

The wiki is, I think!, now updated for the UK element: https://britishexpats.com/wiki/Tax_a...e_Sales-Canada

Siouxie

Correct - deemed disposition - but note the 'when you become a Resident of Canada' - if you did a soft landing, you wouldn't be resident for tax purposes until you moved over to live.. as I understand it... you can read more here:

https://www.canada.ca/en/revenue-age...rants.html#PBC

BigCrunch

Yep. But can You then keep it as your Principal Residence for tax purposes? Your PRincipal Residence does not need to be in Canada from what I can tell, you just need to be ordinarily resident at some point in the year. I’ve found nothing definitive for that case.

BigCrunch

I.e. say you arrive today and hard land. Deem disposition, and gains calculated from today, But you Elect This foreign home to be Your PR, and sell a year from today. There would be No taxable gain due to PRE.

I don’t know if you can do that, or if you can, under what conditions. E.g returning for a weeks vacation.

Edit - apologies as I know it is quite esoteric. I will report back when I eventually find out.