+1(514) 937-9445 or Toll-free (Canada & US) +1 (888) 947-9445

Capital Gains Tax on Hong Kong Property Owned before moving to Canada

COPRQuestion

Hero Member
Aug 30, 2016
318
31
Category........
Visa Office......
Ottawa/Hong Kong
Job Offer........
Pre-Assessed..
App. Filed.......
25-04-16
Doc's Request.
10-06-16
Med's Done....
Upfront
Passport Req..
12-08-16
VISA ISSUED...
29-08-16
LANDED..........
12-09-16
I hope someone can help with this specific query.

I currently reside in Hong Kong and will be relocating to Vancouver early 2017. In order to buy a property in Van I need to sell my property in HK. It is most likely that sale of the HK property will not complete before I move to Van and become a resident for tax purposes.

For extra info, I am a new PR and have never lived or paid tax in Canada before.

Will have have to pay capital gains tax in Canada on the sale of this property?
 

steaky

VIP Member
Nov 11, 2008
14,298
1,628
Job Offer........
Pre-Assessed..
COPRQuestion said:
Will have have to pay capital gains tax in Canada on the sale of this property?
There is no short answer, it all depends on your tax return of that year.

But consider that Hong Kong property price exceed housing cost in Vancouver, couldn't you take out a second mortgage from your Hong Kong property as downpayment for your Vancouver home and then rent out your HK property (rent yeild is usually higher in HK than Vancouver) to pay for mortgage. This way if both homes increase in value, you could gain more?
 

COPRQuestion

Hero Member
Aug 30, 2016
318
31
Category........
Visa Office......
Ottawa/Hong Kong
Job Offer........
Pre-Assessed..
App. Filed.......
25-04-16
Doc's Request.
10-06-16
Med's Done....
Upfront
Passport Req..
12-08-16
VISA ISSUED...
29-08-16
LANDED..........
12-09-16
steaky said:
There is no short answer, it all depends on your tax return of that year.

But consider that Hong Kong property price exceed housing cost in Vancouver, couldn't you take out a second mortgage from your Hong Kong property as downpayment for your Vancouver home and then rent out your HK property (rent yeild is usually higher in HK than Vancouver) to pay for mortgage. This way if both homes increase in value, you could gain more?
Thanks Steaky, so after more reading and reading and reading, I've worked out that when I move I need to declare the fair value of the property. I guess if the fair value is 10m and I sell for 10m then there will be no capital gain and therefore no tax. I guess I just have to manage what I sell at to manage that side.

You suggestion is very valid but I want as little mortgage as possible in Canada as my salary won't be as high, I'd like to put as much down payment as possible to minimize mortgage.

I haven't started yet on finding out tax status of my life insurance contributions, my MPF I'll leave here and a personal pension.

Any recommendations for a decent tax accountant in Canada would be really appreciated
 

wyho007

Hero Member
Dec 14, 2015
388
21
Category........
Visa Office......
Hong Kong
Job Offer........
Pre-Assessed..
App. Filed.......
18-04-2016
Doc's Request.
08-06-2016
AOR Received.
07-05-2016
File Transfer...
30-05-2016
Med's Done....
Upfront
Interview........
Waived
Passport Req..
DM on ECAS: 14-01-2017
VISA ISSUED...
COPR rec'd 04-02-2017
COPRQuestion said:
I hope someone can help with this specific query.

I currently reside in Hong Kong and will be relocating to Vancouver early 2017. In order to buy a property in Van I need to sell my property in HK. It is most likely that sale of the HK property will not complete before I move to Van and become a resident for tax purposes.

For extra info, I am a new PR and have never lived or paid tax in Canada before.

Will have have to pay capital gains tax in Canada on the sale of this property?
Technically, you're taxable on your world wide income since the day you landed and become permanent resident. On that day, all your assets are evaluated at their fair market values, those will be your cost basis. Which means, when you sell any and involves a gain, it's taxable.

Good to talk to a tax accountant though.
 

COPRQuestion

Hero Member
Aug 30, 2016
318
31
Category........
Visa Office......
Ottawa/Hong Kong
Job Offer........
Pre-Assessed..
App. Filed.......
25-04-16
Doc's Request.
10-06-16
Med's Done....
Upfront
Passport Req..
12-08-16
VISA ISSUED...
29-08-16
LANDED..........
12-09-16
wyho007 said:
Technically, you're taxable on your world wide income since the day you landed and become permanent resident. On that day, all your assets are evaluated at their fair market values, those will be your cost basis. Which means, when you sell any and involves a gain, it's taxable.

Good to talk to a tax accountant though.
You're not quite right on this, you are taxed based on your residency status this is based on the below from the CRA:

Significant residential ties to Canada include:

a home in Canada;
a spouse or common-law partner in Canada; and
dependants in Canada;

Secondary residential ties that may be relevant include:

personal property in Canada, such as a car or furniture;
social ties in Canada, such as memberships in Canadian recreational or religious organizations;
economic ties in Canada, such as Canadian bank accounts or credit cards;
a Canadian driver's licence;
a Canadian passport; and
health insurance with a Canadian province or territory.

As I don't have any of these at the moment then it would be very difficult to claim I have residency for tax purposes, in addition I have only spent 15 days in Canada since becoming a PR and that was technically as a 'visitor'. Once I move permanently then I will establish residential ties.
 

steaky

VIP Member
Nov 11, 2008
14,298
1,628
Job Offer........
Pre-Assessed..
COPRQuestion said:
You suggestion is very valid but I want as little mortgage as possible in Canada as my salary won't be as high, I'd like to put as much down payment as possible to minimize mortgage.
Given the lower mortgage interest rate in Hong Kong (I seen the lowest is 1.26% p.a) compare to Canada (about 2% p.a), it make sense to take out a loan there (especailly with your high salary in HK) and buy yourself a home in Canada.
 

COPRQuestion

Hero Member
Aug 30, 2016
318
31
Category........
Visa Office......
Ottawa/Hong Kong
Job Offer........
Pre-Assessed..
App. Filed.......
25-04-16
Doc's Request.
10-06-16
Med's Done....
Upfront
Passport Req..
12-08-16
VISA ISSUED...
29-08-16
LANDED..........
12-09-16
steaky said:
Given the lower mortgage interest rate in Hong Kong (I seen the lowest is 1.26% p.a) compare to Canada (about 2% p.a), it make sense to take out a loan there (especailly with your high salary in HK) and buy yourself a home in Canada.
Good point, I'll have a look into that.

Sounds like you have an account in HK and in Canada, do you have to declare your HK bank account.

What about transferring between bank in HK and Canada, is there any tax on the money?