Can a home abroad be considered as primary residence for taxation purposes?

[zheka]

Hello.
My parents are in process of getting PR. They live in an owned apartment in the home country. I understand that once they land after PR is approved, CRA will consider this property as if it was bough on that day wit fair market price (FMV) and if the property is sold they might have to pay the capital gains tax on the difference between FMV and the selling price.
I also understand that the taxation applies when selling a property which is *not* a primary residence. So my question - can the property in the home country be considered as a primary residence even after landing?

What if they land, receive the CPR, then return to the home country for, say a year or so, sell the property then come back to Canada to settle, will the proceeds be taxed?
How much of paperwork is it?

Thank you.

 

[mad_hatter]

Hello.
My parents are in process of getting PR. They live in an owned apartment in the home country. I understand that once they land after PR is approved, CRA will consider this property as if it was bough on that day wit fair market price (FMV) and if the property is sold they might have to pay the capital gains tax on the difference between FMV and the selling price.
I also understand that the taxation applies when selling a property which is *not* a primary residence. So my question - can the property in the home country be considered as a primary residence even after landing?

What if they land, receive the CPR, then return to the home country for, say a year or so, sell the property then come back to Canada to settle, will the proceeds be taxed?
How much of paperwork is it?

Thank you.

Yes, your parent's apartment can be considered as their principle residence and is not subject to capital gains tax. However, one of them must live in it sometime during the year and it cannot be rented out when your parent is away. There is not much paperwork, they just need to declare the sales in the tax return.

 

[zheka]

There is not much paperwork, they just need to declare the sales in the tax return.

Thank you. Is it even eeded to file the tax return if they are not living in Canada most of that year? Also is there some kind of paper proving the FMV of the property required when landing?

 

[mad_hatter]

They only need to file a tax return once they became a tax resident, ie establish significant residential ties. Your parents are deemed to have purchased the property on the date they move to Canada to establish residency, which could be different than the date they landed. They could obtain a valuation report on their property. CRA may or may not ask for the report.