Originally Posted by ralphster

In terms of Capital Gains down the line if selling a property that you have been renting in the UK, my understanding is that this figure is based on the gain in the price of the property from the day you started to renting.

e.g. Day you started renting out - Property Price = £100,000

Day you sell property further down the line - Property Price = £150,000

Captial Gain = £50,000

In terms of proving what it's value was on the day you started renting, does anyone know what the taxman will accept as written proof of its value? Do the Cdn and UK Taxman want different proofs (do they need this?).

I don't think an estate agent's "valuation" is worth the paper it's written on but I might be wrong. A paid surveyor valuation is probably as good as you can get, but I wonder if they accept an estimation based on Land Registry "sold" prices for your area around this time?

In the UK, I believe the Capital Gain only applies if the property is not your main residence. When you move to Canada, I hear a term called "Non-Resident Landlord" (NRL) applies.

Does anyone know the tax implications of being a NRL in Canada with a property in the UK?

Originally Posted by gryphea

Capital gain in the UK is worked out very differeently and is a ratio of years you have owned it, years you have lived in it, 3 years thrown in for free all ratioed against the total capital gain

After 5 years you shouldn't be liable for UK capital gains, but check this out with IR yourself.

Originally Posted by Yelkcub

Hi

We have two properties in the UK (our family home prior to emigrating and another property that has been rented for @ 5 years now).

The things that I think you need to consider are:

1. Mortgage - Do you want to take out a fixed rate or similar - if you are based in UK this is far easier to secure with a UK lender than when you are abroad. It might even be worth remortgaging if you have equity in the property as the higher interest only repayment will allow a greater offset against tax liability and it will give you a lump sum to play with however you wish.

2. Lender - you need to get their permission to rent out the property.

3. Get a company to managing renting it out and collecting the rent unless you have someone you can trust to act on your behalf - the fee associated with this can be offset against tax liability.

4. If you have a good sized family home, weigh up the rent achieved VS having a good family renting it. for example if your home rents out at £2K per month that equates to £24K per year after tax which assuming the renter pays tax is a whooping £30K before tax @ 40% which is before they have to pay council tax, stats, etc. Over a certain value it becomes uneconomic for a working family to rent it out. You might just take the money and look at renting to social housing tenants but this carries a risk as most now rent directly from the landlord which removes the security of the financial secure HA / LA - if you have to pursue a tenant who is on welfare to recover costs for damages incurred and they don't have a "pot to piss in" you're wasting your time.

5. Ideally if you can keep the UK home; do it. As I said above release equity. The £ to the $CA is so poor at the moment, but it is likely that it will get better in the long term future.

If UK house prices continue to grow , you will hopefully be better off financially than selling and exchanging it all now!

6. If you are not in construction and have no contacts in the UK then I would get a Hot Water / Heating warranty from someone like British Gas but ensure that it is worth more than the paper its printed on as some warranties offer little protection.

7. Get a file together with User Instructions and get them in some sort of index system that makes sense. if there are any quirks particular to your house, write out a users guide (if you want one I could email you a template). This will then be handed to the tenants for their reference and assistance.

8. You will need to get a Gas Landlord's Certificate done once the tenant takes occupation - this is reviewed annually or at each change of tenancy.

9. Partially furnish the property as it will allow you to claim 10% of revenue against wear and tear when filling in your tax return. Partially furnish can mean just minimal amounts of furnishing (curtains, wardrobes, etc). It also helps slightly if you need to evict the tenant.

10. Leave no electrical goods except kitchen and laundry appliances - if they go wrong you might have to replace them.

11. If you live in a area that people might come to on holiday, you might consider renting it out on holiday lets (http://www.ownersdirect.co.uk is a good website to see if this is viable. You get a better rate but are likely to have more voids.

12. Keep at least one UK bank account open to deal with income and expenditure.

13. Some letting agencies will hold back 10% of revenue to cover tax liability as you are a non-dom. If you complete the relevant HMR&C paperwork you can get this payment in full but you need to do a tax return.

This is all I can think of but if you have any question or think of anything I might have missed out let me know and I will

Yelkcub

Originally Posted by dbd33

There are umpteen recent threads about this and probably an entry in the wiki, there's a button labelled "search" above. Some points about the Canadian end of things;

- for Canadian CGT the gain is measured from when you land in Canada, the value of the property is deemed to be in Canadian dollars converted at the time of landing so shifts in exchange rate as important as shifts in value

- three estate agents valuations and/or a surveryor's written opinion should suffice. These should be as of the date of emigration

- a year after emigrating a proprerty in the UK cannot be your primary residence for the purpose of Canadian CGT

- NRL means the income from the property is not subject to tax deductions before being remitted to you in Canada. It's taxed as income in Canada subject to the same expense deductions as a rental property in Canada.