Capital Gains Tax

Old Dec 26th 2019, 6:48 pm
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Default Capital Gains Tax

Hi,

I am planning on moving to Ireland this summer. As we have a house to sell here in Canada do I have to stay in Canada until the house is sold and funds deposited into my bank account before I can fly out? I have been told that is what I will need to do to avoid capital gains tax but I just wanted to be sure.

Also on a side note, has anyone used a shipping company that they have been happy with from Vancouver to UK/Ireland?

Thanks
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Old Dec 26th 2019, 11:06 pm
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Default Re: Capital Gains Tax

Sorry - can’t answer your question but someone recently asked about moving a large amount of money from Canada to the UK after they had left Canada - it seemed impossible to do remotely and they ended up having to make a short trip back just to liaise with the bank and arrange the transfer. Something to be aware of or at least check before you leave.
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Old Dec 26th 2019, 11:50 pm
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Default Re: Capital Gains Tax

I actually saw that after I posted and was saying to my daughter maybe I would stay to make that an easier thing to deal with!
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Old Dec 30th 2019, 5:16 pm
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Default Re: Capital Gains Tax

HI

Originally Posted by DoI View Post
Hi,

I am planning on moving to Ireland this summer. As we have a house to sell here in Canada do I have to stay in Canada until the house is sold and funds deposited into my bank account before I can fly out? I have been told that is what I will need to do to avoid capital gains tax but I just wanted to be sure.

Also on a side note, has anyone used a shipping company that they have been happy with from Vancouver to UK/Ireland?

Thanks
1. You really don't want to be classified as a non residence when you sell your property.
2. Here is an article about NR selling real property

Canada Revenue Agency’s (CRA) guidelines state that a person is considered a non-resident (NR) for tax purposes if he/she is:
  • Normally, customarily, or routinely live in another country and are not considered a resident of Canada; or
  • Do not have significant residential ties in Canada; and
    1. lived outside Canada throughout the tax year; or
    2. stayed in Canada for less than 183 days in the tax year.
To determine the residence status, all relevant facts in each case must be considered, including residential ties with Canada and length of time, object, intention, and continuity with respect to stays in Canada and abroad.When selling a real estate property, the NR seller, and the buyer as well, must make sure to follow the tax reporting rules set by CRA. Not doing so could result in penalties for the seller, and a significant risk on the part of the buyer as well, as the buyer could be held responsible for the taxes the NR seller owes should they decide to not pay their taxes owing resulting from the sale.The Income Tax Act (“ITA”) of Canada generally requires the NR seller to notify CRA either before they dispose of the property or within 10 days of disposition. Once CRA has received the related forms and an acceptable security to cover the taxes payable that may result from the sale (generally 25% of the net capital gain), CRA will issue a Certificate of Compliance to the NR seller and their solicitor. A copy of the certificate will also be sent to the buyer.The security provided by the NR seller and/or buyer will be credited to the seller’s account. A final settlement of the tax (should there be tax owing resulting from the sale) should be made when the NR seller’s files a NR Income Tax Return for the year the sale occurred and assessed by CRA. This is done by CRA to ensure that it has sufficient security from the NR to cover the taxes owing should the NR decides to disappear without paying their tax liabilities."

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Old Dec 30th 2019, 6:53 pm
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Default Re: Capital Gains Tax

We have recently looked into this scenario and sought the advice of an accountant in BC. Yes, you do have to sell your house before you move back to Ireland or the UK to avoid paying capital gains. This is also the case for a car or anything else that the Canadian government deems to be of a high value e.g expensive jewelry etc.

Hope that helps.

Last edited by Mrchuffie1; Dec 30th 2019 at 6:55 pm.
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Old Dec 30th 2019, 11:21 pm
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Default Re: Capital Gains Tax

Thanks all I figured that was the case that I needed the sale to be completed before the move. I'll have to hit up a hotel for a few days after the sale is completed and clear up the loose ends
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Old Jan 5th 2020, 6:50 pm
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Default Re: Capital Gains Tax

So if we sell our house, live in a hotel for a week, and file the sale of our house that week, we do not have to pay capital gains tax?

How does this work on the end of 2020 year tax return. it asks if you sold a house the prior tax term?

We move back to England the end of May after 14 years in Ontario.
Also if you are owed money on your return but are no longer in Canada, how does that work?
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Old Jan 5th 2020, 7:35 pm
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Default Re: Capital Gains Tax

Okay, I am now very confused. I have just been to emigrates part of CRA website, and that is saying that if you sell your property in the year you become a non residence, then yes you do have to pay capital gains tax on the profit of your house.
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Old Jan 5th 2020, 9:46 pm
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Default Re: Capital Gains Tax

Originally Posted by blokeandbird View Post
Okay, I am now very confused. I have just been to emigrates part of CRA website, and that is saying that if you sell your property in the year you become a non residence, then yes you do have to pay capital gains tax on the profit of your house.
Hello Bloke and bird,
I think I may have got a bit confused between talking about capital gains and the departure tax. If you become a non-resident of Canada then you may have to pay a departure tax on the sale of your property, but only if you sell it after leaving Canada. For example, if you have a property worth $400,000 and it sells when you are in the UK then the CRA will withhold 25% of the house's sale value = $100 000. I believe that the departure tax also applies to other expensive items like cars etc which may sell after you have left.
If you sell the property before you leave for the UK, then this tax will not apply. My accountant says it is wise to sell your house long before you leave for the UK as she knows of people who sold their house and left the next day and ended up getting charges the 25% tax.
Capital gains tax on a property does not apply to the profit you make on your home as long as it was your principal or main residence.(this is from the government website).

So to be safe sell your expensive items before you leave. Also, make sure that you know what to do with any RRSPs and similar investments.
I would strongly suggest that you find an accountant who is familiar with this stuff. We lucked out and found a really good one who was in the process of helping her English aunt to move back to the UK.
I am no expert on this and can only tell you what I have learnt myself, so please double check as it's a big move. I'm not sure if I can suggest YouTube or not here. However, we did find a good video by Alan Madden called Becoming a non- resident of Canada. HE LISTS ALL THE FORMS YOU NEED TO FILL OUT AND WHEN TO DO THIS..

I hope this helps.


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Old Jan 6th 2020, 9:27 pm
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Default Re: Capital Gains Tax

Thank you that makes much more sense.
We was thinking of having sale close 2 weeks before leaving so we could make sure we settled all bills ect.

I will see what experts we have locally to reach out and speak with
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Old Jan 6th 2020, 11:34 pm
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Default Re: Capital Gains Tax

Yes, it's all a bit of a kerfuffle. We went to one accountant who was useless and knew nothing about it all. The next person we found was great. However, I made a point of emailing her all my questions and she researched it and sent the answers back in writing which meant we could refer to those answers in a more concrete way i.e refer directly to any answers to ask for clarification. For us this worked better than talking and listening in person where we previously found ourselves rushing to scribble down info and often missing what was said. Anyway, I'm sure you will do what works best for you
We are still trying to find out about how our Canadian pensions will be affected.
All the best to you.
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