Capital Gain to report on Sale of property in India

[pschawla369]

Hello Team

Question is about the foreign income(Capital Gain) to report to CRA while filling the individual tax return in Canada.
How much Capital Gain should report in following scenario? Should it be as per option A = 9058.58 or as per Option B = 14754.10

Scenario: Individual from Indian origin(Resident of Canada) sold the property in 2022 for INR 30 lakh in India which has bought for INR 21,00,000.00 in year 2017.
Capital Gain Tax Calculation in India was as follows
Sale Proceeds 30,00,000.00
Indexation Cost (21,00,000.00*317/272) 24,47,426.47
Capital Gain 5,52,573.53
LTCG 20% 110,514.71
Health and Education Cess 4% 4420.59
Total Tax Paid in India in INR 1,14,935.29

(Assumption Exchange rate = CAD to INR 1 CAD= 62 INR)

Option A INR CAD
Sale proceeds 30,00,000.00
ACB (Adjusted Cost Base) 24,47,426.47
Capital Gain Income to report 5,52,573.53 CAD 9,058.58
Foreign Tax Credit 1,14,935.29 CAD 1,884.19

Option B INR CAD
Sale proceeds 30,00,000.00
ACB (Adjusted Cost Base) 21,00,000.00
Capital Gain Income 9,00,000.00 CAD 14,754.10
Foreign Tax Credit 1,14,935.29 CAD 1,884.19

 

[caninfoseeker]

1. At what date you become landed immigrant (canada resident)
2. What was fair market value of the property on date of landing
3. That fmv will be considered as purchase price to calculate capital gain loss.
4. By the way if said property was earning any rental income than income tax on rental income is also applicable (from the day you become tax resident of canada)
Disclaimer : not a legal advice for knowledge exchange only

 

[pschawla369]

Hello Caninfoseeker,

Thanks for your response,
Individual immigrated in June 2018 on PR.
Please be informed that there was no rental income from the property. it was pure for personal use and remain vacant.
Regarding Fair Market value in 2018. That I am not sure of.
1. Kindly advise what type of document to arrange to determine the Fair Market value of property in June 2018.
2. if Hypothetically we assume the FMV in Jun 2018 is 27lakh will the capital gain consider as 3lakh.

 

[number411]

Hello Caninfoseeker,

Thanks for your response,
Individual immigrated in June 2018 on PR.
Please be informed that there was no rental income from the property. it was pure for personal use and remain vacant.
Regarding Fair Market value in 2018. That I am not sure of.
1. Kindly advise what type of document to arrange to determine the Fair Market value of property in June 2018.
2. if Hypothetically we assume the FMV in Jun 2018 is 27lakh will the capital gain consider as 3lakh.

I’m in similar situation.
It looks like we might have to get a certificate from a proper property Valuer in india, which states what’s the Fair Market Value of property in June 2018

 

[steaky]

I’m in similar situation.
It looks like we might have to get a certificate from a proper property Valuer in india, which states what’s the Fair Market Value of property in June 2018

How much equivalent to CAD?

Shouldn't if you own foreign property and the cost is more than $100,000, in 2018, you would have already recorded your fair market value in your T1 2019, 2020, 2021 & 2022? If not, you might also need to pay a penalty for fail to do so. You should have figured your FMV out before the pandemic began and record it annually..

 

[seamarine]

I’m in similar situation.
It looks like we might have to get a certificate from a proper property Valuer in india, which states what’s the Fair Market Value of property in June 2018

Did you manage to locate such a property valuer who can do that for a back dated year?

 

[aroycanada]

How much equivalent to CAD?

Shouldn't if you own foreign property and the cost is more than $100,000, in 2018, you would have already recorded your fair market value in your T1 2019, 2020, 2021 & 2022? If not, you might also need to pay a penalty for fail to do so. You should have figured your FMV out before the pandemic began and record it annually..

Not if the property is for personal use only with no rental income.

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/foreign-reporting/questions-answers-about-form-t1135.html#h7

I am also curious about cost basis calculation - in my case for inherited property. How does one figure out cost basis for the year one became PR?