Question about going back to uk with house in Canada
Jun 10th 2015, 10:57 pm
#1
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Joined: Dec 2004
Posts: 60
Question about going back to uk with house in Canada
Just got back from a UK trip, our third in four years. Now we have a little one the draw is a lot stronger and our Canadian family here is thinning out.
At this time I start looking at the process if we decided to return to the UK after 10 years in Calgary. The condo we are in was bought in the good times and now we owe more than its worth, however it has good rental potential.
I got reading about it and for a non resident to rent out a property in Canada there are some tax obligations, 25% has to go to the gov, but can be claimed back.
Has anyone else gone through this route? I know more sell up before they head out but its just not feasible for us at this time with the property values down.
Love to hear your input.
Dan
At this time I start looking at the process if we decided to return to the UK after 10 years in Calgary. The condo we are in was bought in the good times and now we owe more than its worth, however it has good rental potential.
I got reading about it and for a non resident to rent out a property in Canada there are some tax obligations, 25% has to go to the gov, but can be claimed back.
Has anyone else gone through this route? I know more sell up before they head out but its just not feasible for us at this time with the property values down.
Love to hear your input.
Dan
Jun 12th 2015, 5:29 pm
#2
Just Joined
Joined: Apr 2014
Posts: 19
Re: Question about going back to uk with house in Canada
Hi
This is a little complicated. Firstly, under Canadian Tax Law, if you change the status of your principal private residence to a rental you may be subject to Canadian Capital Gains tax when you finally sell. A gain could arise if in the future property values increase and you do end up making a profit. The years in which you lived in the house are not counted. As soon as it becomes a rental, you have in affect, sold it at a current market value and repurchased at the same value. This is the base cost which will be used when you finally sell. It's worth taking a look at the Canadian Revenue Agency website www.crg-arc.gc (Principal Residence & Other Real Estate) and also (changing the status of your principal residence). You will not have to pay UK Capital Gains Tax on the sale of the Canadian property. Obviously, you will still need to complete Canadian Tax Returns.
Secondly, a double taxation agreement exists between the UK & Canada. Once back in the UK, you will need to complete UK Self Assessment Tax Returns to include Canadian rental income and Canadian tax paid. Foreign Tax Credit Relief will be offset against the Canadian tax but the amount depends on the double taxation agreement with Canada. So, you may not necessarily receive a refund of all of the Canadian tax. It's definitely going to be worth getting professional help with this when you return to the UK.
This is just a brief outline as there is really too much subject matter to write about in this small space. I hope it helps a bit though.
I used to be a tax advisor in the UK and now live in Calgary. I'm sort of in the same boat but my husband is Canadian & we have put off applying for his Visa because of the downturn. It's a bummer!
This is a little complicated. Firstly, under Canadian Tax Law, if you change the status of your principal private residence to a rental you may be subject to Canadian Capital Gains tax when you finally sell. A gain could arise if in the future property values increase and you do end up making a profit. The years in which you lived in the house are not counted. As soon as it becomes a rental, you have in affect, sold it at a current market value and repurchased at the same value. This is the base cost which will be used when you finally sell. It's worth taking a look at the Canadian Revenue Agency website www.crg-arc.gc (Principal Residence & Other Real Estate) and also (changing the status of your principal residence). You will not have to pay UK Capital Gains Tax on the sale of the Canadian property. Obviously, you will still need to complete Canadian Tax Returns.
Secondly, a double taxation agreement exists between the UK & Canada. Once back in the UK, you will need to complete UK Self Assessment Tax Returns to include Canadian rental income and Canadian tax paid. Foreign Tax Credit Relief will be offset against the Canadian tax but the amount depends on the double taxation agreement with Canada. So, you may not necessarily receive a refund of all of the Canadian tax. It's definitely going to be worth getting professional help with this when you return to the UK.
This is just a brief outline as there is really too much subject matter to write about in this small space. I hope it helps a bit though.
I used to be a tax advisor in the UK and now live in Calgary. I'm sort of in the same boat but my husband is Canadian & we have put off applying for his Visa because of the downturn. It's a bummer!
