Taxation on foreign property sold

[montesir]

Hi all.. I have a question regarding taxation in Canada on capital gain from sale on foreign property and its FX implications.

Question: I migrate to Canada in 2013 and the value of foreign property e.g. is $120,000 (based fair value on the date I land). I disclose this in my tax return for 2014. In 2015 I sell the property for $140,000. The gain in terms of capital appreciation is only $5,000 but the foreign exchange rate impact is $15,000. I do not remit any money to Canada so do not really benefit from the exchange gain. Do I have to pay capital gain tax for the entire $20,000 or for just $5,000?

thanks.

 

[PMM]

Hi

Hi all.. I have a question regarding taxation in Canada on capital gain from sale on foreign property and its FX implications.

Question: I migrate to Canada in 2013 and the value of foreign property e.g. is $120,000 (based fair value on the date I land). I disclose this in my tax return for 2014. In 2015 I sell the property for $140,000. The gain in terms of capital appreciation is only $5,000 but the foreign exchange rate impact is $15,000. I do not remit any money to Canada so do not really benefit from the exchange gain. Do I have to pay capital gain tax for the entire $20,000 or for just $5,000?

thanks.

1. It looks like you will have to pay the capital gains on the $20K, but check with an accountant.

From CRA Capital Gains



When calculating the capital gain or loss on the sale of capital property that was made in a foreign currency:

convert the proceeds of disposition to Canadian dollars using the exchange rate in effect at the time of the sale;
convert the adjusted cost base of the property to Canadian dollars using the exchange rate in effect at the time the property was acquired; and
convert the outlays and expenses to Canadian dollars using the exchange rate in effect at the time they were incurred.

 

[naticom]

Hi,

I have similar question but I remember if the foreign propety is for self-use only, not for business or for making money, the tax is exempted.

I sold my condo and want to wire my money to Canada. However, I did not go back so my mom will take of this thing. Will CRA check my account if they see my mom wiring the money (about 150K) into my account? What should I prepare to prove that those are my money? Is the sell agreement good enough?

Thanks

 

[torontosm]

Hi,

I have similar question but I remember if the foreign propety is for self-use only, not for business or for making money, the tax is exempted.
Thanks

You are confusing the primary residence capital gain exemption with your situation. You can not be exempt from capital gains taxes on foreign properties, only those in Canada that you reside in. Further, with the changes to this exemption last week, you can expect extra scrutiny from the CRA so I would advise against event trying to evade taxes on the sale transaction.

 

[MCHamilton]

Looking for a Tax Accountant in Canada that can help with submitting (or prepare) a 2016 return that includes a property sold in Mexico (to understand Cap Gains and any other implications). Greatest source of confusion is the belief that I paid Cap Gains to the Mx Notary when closing the deal and the tri-lateral agreement applies that payment to my Cdn taxes.

 

[andy6835]

Looking for a Tax Accountant in Canada that can help with submitting (or prepare) a 2016 return that includes a property sold in Mexico (to understand Cap Gains and any other implications). Greatest source of confusion is the belief that I paid Cap Gains to the Mx Notary when closing the deal and the tri-lateral agreement applies that payment to my Cdn taxes.

You can contact on 647-408-5535. Jalpesh Patel. He is professional, licensed & has a great service in Canada. He expertises in the similar cases. Good Luck.!

 

[MCHamilton]

Thank you!