Bringing in property sale proceeds from abroad

[mirko_81]

Hi,
I think I am in the same situation here:
--property from abroad that I own since ~2000
--arrived in Canada with work permit in 2013
--got a PR on 2016
--never declared the property because the accountant told me that I do not need to if I do not get any profit form it
(indeed, my property is just closed and 'parked' there)

What happens if I sell it?

Thanks!

 

[steaky]

Hi,
I think I am in the same situation here:
--property from abroad that I own since ~2000
--arrived in Canada with work permit in 2013
--got a PR on 2016
--never declared the property because the accountant told me that I do not need to if I do not get any profit form it
(indeed, my property is just closed and 'parked' there)

What happens if I sell it?

Thanks!

How much is the property worth?

 

[mirko_81]

not sure - but I suppose more than 100k - let's say 200k (just speculating).

 

[steaky]

not sure - but I suppose more than 100k - let's say 200k (just speculating).

If you are speculating the property, then you probably have a capital gain - which will be a profit. You probably need to declare it because now the foreign property is worth more than 100k.

 

[torontosm]

not sure - but I suppose more than 100k - let's say 200k (just speculating).

Your accountant gave you bad advice. You have to declare all foreign properties and assets that are worth over $100k on your tax returns. When you sell your property, you will have to pay capital gains on the difference between the sale price and the value of the property when you first moved to Canada and became a tax resident. Without declaring this and paying the capital gains, you will have an issue when you try to bring the funds over to Canada.

 

[steaky]

Your accountant gave you bad advice. You have to declare all foreign properties and assets that are worth over $100k on your tax returns. When you sell your property, you will have to pay capital gains on the difference between the sale price and the value of the property when you first moved to Canada and became a tax resident. Without declaring this and paying the capital gains, you will have an issue when you try to bring the funds over to Canada.

Perhaps the foreign property was less than $100k in 2013 and so the accoutant told him not to declare?

 

[torontosm]

Perhaps the foreign property was less than $100k in 2013 and so the accoutant told him not to declare?

Perhaps, but it needed to be declared in 2014, 2015 and in 2016 as well.

 

[EU_2010]

I’m also in a similar situation.
Looking at buying a house here and borrowing from my RRSP will not cut it in terms of required down payment. I own a condo in my home country which I am selling. I won’t have to pay CGT in my home country as I’ve owned it for 10+ years so they consider it outside of “speculation” and CGT doesn’t apply. I’ve rented it out in the past 10 years and always declared the proceeds in my tax declaration both in my home country as well as here in Canada.
- I arrived on a work permit in 2010. Have filed and paid taxes every year and declared the foreign property and resulting income since the beginning.
- Obtained PR in March 2014.
- I understand that in Canada I will have to pay CGT on the increase in value. I understand that this applies to the difference in value it had when I became a PR (2014) to the time I sell it (2017). Let's say the difference is 100k EUR, how much CGT will I have to pay? Will I declare this in my tax return for 2017 that I file beginning of 2018? I assume I will need a value assessment dated March 2014 as proof? What do people typically submit?
- The other question is how to get this money over without getting flagged. I know my online banking lets me do 10,000 EUR per transfer but certainly if I do multiple of these, it will look suspicious. I know that if I bring the whole amount in physically and declare it, this is not a problem, but certainly I do not fancy traveling with let’s say 200k cash on me. So wiring it online would be my preference. I will speak to the banks I bank with in both countries but wanted to hear if anybody has had any experience with this.
- It’s all legitimate income and I want to do the right thing and declare what I need to.
- If anybody can recommend a lawyer/tax consultant specializing in such transfers from EU countries, this would also be appreciated.
I would also appreciate experiences from others having gone through this process.

 

[steaky]

- I understand that in Canada I will have to pay CGT on the increase in value. I understand that this applies to the difference in value it had when I became a PR (2014) to the time I sell it (2017). Let's say the difference is 100k EUR, how much CGT will I have to pay? Will I declare this in my tax return for 2017 that I file beginning of 2018? I assume I will need a value assessment dated March 2014 as proof? What do people typically submit?

Yes, you declare this in your tax return for 2017 and I guess the CGT would be about 11k EUR. You don't really need to have a value assssment prepared by a professional. For example, if you receive any letters from your city about the assessment of the value of your property, you can use this as proof.

 

[mirko_81]

ok - thanks all for the info.
Let me try to recap:

I have this property since a long time (before 2000, if I remember correctly), and I became PR last year.
I never declared the property on advice from an accountant.
Let's note that I never got any money from the property - it is just there waiting for me to sell (not for speculating, but because it has sentimental value..even if now I am inclined to sell anyway - and, by the way, it is going to be a serious loss, given the crash of the market).

So, which option do I have now?
-- if I do not declare, isn't that ok? - given the law says it needs to provide a profit in order to be declared?
Also, what do you mean by: you will have problems when you decide to bring the money in?

-- if I declare, what does it happen? (again, assuming I can declare, given there is no profit)

Thanks again, you are all being very helpful.

 

[steaky]

So, which option do I have now?
-- if I do not declare, isn't that ok? - given the law says it needs to provide a profit in order to be declared?
Also, what do you mean by: you will have problems when you decide to bring the money in?

-- if I declare, what does it happen? (again, assuming I can declare, given there is no profit)

Thanks again, you are all being very helpful.

No, regardless profit or loss, you still need to declare your foreign property value $100K of more.

If you declare for a loss, you will have net capital loss for that year. You can use your unused net capital losses to reduce any taxable capital gains in the future.

 

[mirko_81]

I see - thanks a lot for the explanation..
Do you know what will happen given that - for 3 years - I have said no to that question, while now I am saying yes?
Should I contact the CRA and explain them?

 

[steaky]

I see - thanks a lot for the explanation..
Do you know what will happen given that - for 3 years - I have said no to that question, while now I am saying yes?
Should I contact the CRA and explain them?

Just get a reliable accountant this time.

 

[mirko_81]

thanks again - well, I will try to get a reliable accountant..
the other 2 I tried (both saying not to declare the property) seemed reliable..

that is actually why I decided to do the tax declaration by myself .. at least I will pay for my errors

 

[steaky]

thanks again - well, I will try to get a reliable accountant..
the other 2 I tried (both saying not to declare the property) seemed reliable..

that is actually why I decided to do the tax declaration by myself .. at least I will pay for my errors

yes, especially if you have confidence for d.i.y