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UK Rental Properties Taxes etc
Hello, I can’t seem to find the thread I’m looking for. Maybe someone can link for me. But I have some questions as to what we need to do before we immigrate with regards to our houses for tax purposes. We currently have one but to let and then the house we’re living in. We plan to rent both when we move initially then sell one or two after a year and buy in Canada. I believe I need to get both houses valued. Is there anything else I need to get done? I think I understand correctly that we’ll pay tax on any increase in value or change in exchange rate from the date we move to the date we sell. Also, when we sell our houses in the UK and bring that money across will we be taxed on it as income? Is there a big advantage to moving money before we become Canadian tax residents? Would anyone recommend just selling now instead of renting? Any wise words appreciated by someone who has done this before. Thanks!! |
Re: UK Rental Properties Taxes etc
You will be liable for CGT in Canada on the increase from when you became a PR. The rules changed in the UK in 2015 regarding CGT for non residents. We sold some 3 months after the rule change and had nothing to pay to HMRC BUT the sale must be declared within 30 days. We paid a lot of CGT to the CRA. There's a double taxation agreement so you shouldn't pay twice. See an accountant. That's what we did: not before we sold but to handle the tax reporting. In fact we consulted 2: one in the UK and one in Canada.
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Re: UK Rental Properties Taxes etc
Originally Posted by Sarah 1234
(Post 12505880)
Would anyone recommend just selling now instead of renting?
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Re: UK Rental Properties Taxes etc
It's a real hassle renting long distance: we did it for 3 years.
Someone once said to me: "tenants will be calling you up telling you the boiler has broken down on Christmas Day" This happened to us only it was a few days before Christmas and finally fixed late Christmas Eve. Tenant still wasn't happy as someone had had to go into the house while they were visiting friends to fix it. You can't win .... It was a very stressful time. |
Re: UK Rental Properties Taxes etc
Thanks for the input. We’re planning on putting it on a managed let so really shouldn’t be any hassle for us. What was it like tax wise when you sold and brought the money across? |
Re: UK Rental Properties Taxes etc
You will be liable to tax in Canada on your rental income regardless of whether or when you move the money to Canada. You must declare the value of your overseas property on your first Canadian tax return. You will be liable to Canadian capital gains tax when you finally sell the property. All money is valued in Canadian dollars on the date paid using the official daily FOREX rates published by the Bank of Canada (so even if your UK house sells for the same GBP as it was valued at when you moved, it may still generate a capital gain due to a FOREX gain)
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Re: UK Rental Properties Taxes etc
Thanks. Yes this is roughly what I thought. When you move the lump sum across to your Canadian bank account do you get taxed on it as income?
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Re: UK Rental Properties Taxes etc
Originally Posted by Sarah 1234
(Post 12506526)
Thanks. Yes this is roughly what I thought. When you move the lump sum across to your Canadian bank account do you get taxed on it as income?
AIUI, you get taxed on it as overseas income whether you move it across or not - you are taxed when it is paid to you at its value in CAD wherever you are paid. If you then delay in actually moving the money to Canada, you would then be liable to Canadian Capital Gain Tax on the growth (if any) in value from the date the money was paid as overseas income to the date you moved it to Canada. You would also be subject to Canadian tax on any interest earned in the interim. You can include in the calculation for a house sale any house sale expenses (estate agents fees, legals fees etc.) but these must be itemised. I think you can likewise allow for rental expenses against any rental income (as you could if you were taxed in the UK). |
Re: UK Rental Properties Taxes etc
I think it's something like this:
If the house is valued at £250,000 when you become a PR and you sell it for £350,000 several years later, as a Canadian resident you are liable to pay CGT on 50% of the £100,000 (converted to CA$ as per Hurlabrick's comments above) if it isn't your Principal Private Property. Obviously if you jointly own it you'll be paying CGT on half of the 50%. But of course it will be a bit less because I think you can deduct expenses. I don't know what the HMRC UK non resident CGT amounts/formula is. |
Re: UK Rental Properties Taxes etc
Also any assets held overseas - including property, cash, investments etc., over $100,000 in value must be declared annually to CRA - as well as world income.
https://www.canada.ca/en/revenue-age...rms/t1135.html This might be of use :) https://www.canada.ca/en/revenue-age...mmigrants.html |
Re: UK Rental Properties Taxes etc
Originally Posted by Siouxie
(Post 12506610)
Also any assets held overseas - including property, cash, investments etc., over $100,000 in value must be declared annually to CRA - as well as world income.
https://www.canada.ca/en/revenue-age...rms/t1135.html This might be of use :) https://www.canada.ca/en/revenue-age...mmigrants.html https://www.canada.ca/en/revenue-age...orm-t1135.html |
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