How much tax to pay on overseas real-estate rental income ?
- Thread starter Can10
- Start date
@ Mitali 
@ Cappuccino
Thats cool info dude. Gonna get keep it in mind.
+1 to you both and qorax as well.
@ Cappuccino
Thats cool info dude. Gonna get keep it in mind.
+1 to you both and qorax as well.
Let's assume I am earning $13 per hour from a survival job which makes a yearly income of $27,456 ($13 x 8h x 22days x 12months).
Let's also assume that I am receiving a yearly income of $15,000 from rent of my overseas property.
This makes total earning of $42,456. This falls under lowest bracket of taxable income, for which Federal Tax Rate is 15% and that of Provincial 5.05% (Ontario); total 20.05%. Assuming there is no other benefit available to get credit against taxation, hence the amount of tax deduction will be $42,456 x 20.05% = $8,512. This leaves a balance of $33,944 in hand; or a a monthly take-home income of $2,829.
1. Do you think this calculation is correct and reflects actual situation on ground.
2, Do you think a monthly take-home income of $2,829 would be enough for a family of 3 (me, my wife and our only child studying in high school) in the initial year(s).
Appreciate your comments
Kind regards,
Can10
Let's also assume that I am receiving a yearly income of $15,000 from rent of my overseas property.
This makes total earning of $42,456. This falls under lowest bracket of taxable income, for which Federal Tax Rate is 15% and that of Provincial 5.05% (Ontario); total 20.05%. Assuming there is no other benefit available to get credit against taxation, hence the amount of tax deduction will be $42,456 x 20.05% = $8,512. This leaves a balance of $33,944 in hand; or a a monthly take-home income of $2,829.
1. Do you think this calculation is correct and reflects actual situation on ground.
2, Do you think a monthly take-home income of $2,829 would be enough for a family of 3 (me, my wife and our only child studying in high school) in the initial year(s).
Appreciate your comments
Kind regards,
Can10
Not exaclty. You also get your first $10,527 tax free known as personal amount and if married for your spouse too. In your case you get $10,527 x 2 ($21,054). You might also qualify for many other deductions but your worst case scenario for federal tax is
($42,456 - 21,054) x 15% = $3,210
For Provisional (Ontario in this case) there is also personal amount for you ($9,104) and your spouse ($8,503). For a total of ($17,067) So your prov. tax will be approx.
($42,456 - 17,067) x 5.05% = $1,254
Of course I did not take into account the thresholds for your case because you are close to the borderline but any amount in addition to $41,544 you pay 22% for federal and any amount in addition to $37,774 you will pay 9.15% for Ontario and that's all calculated prior to subtraction of your personal amount but I simplified it for your case.
As for the living expenses it all depends on your lifestyle. You can get a decent 2 bedroom apt in Toronto for about $1,200/month or a condominium for about $1,500. For most families of 3/4 I know that amount is just about enough.
¬m2l
($42,456 - 21,054) x 15% = $3,210
For Provisional (Ontario in this case) there is also personal amount for you ($9,104) and your spouse ($8,503). For a total of ($17,067) So your prov. tax will be approx.
($42,456 - 17,067) x 5.05% = $1,254
Of course I did not take into account the thresholds for your case because you are close to the borderline but any amount in addition to $41,544 you pay 22% for federal and any amount in addition to $37,774 you will pay 9.15% for Ontario and that's all calculated prior to subtraction of your personal amount but I simplified it for your case.
As for the living expenses it all depends on your lifestyle. You can get a decent 2 bedroom apt in Toronto for about $1,200/month or a condominium for about $1,500. For most families of 3/4 I know that amount is just about enough.
¬m2l
Thank you dear me2land, very well explained, +1 for you.
Just one more clarification needed. I considered me as the ONLY family member working and wife doing no job at all. In this case, the tax free income of $10,527 will be taken once or twice for tax calculation purpose.
Hope to hear from you and other seniors.
Regards,
Can10
Just one more clarification needed. I considered me as the ONLY family member working and wife doing no job at all. In this case, the tax free income of $10,527 will be taken once or twice for tax calculation purpose.
Hope to hear from you and other seniors.
Regards,
Can10
One thing is disturbing me from start to end that you always seeking to invest out of Canada , to save taxes and making money but you never intend to dedicate to Canada .The proof is your intention to invest on property outside Canada .Why dont you think to invest in Canada as a Canadian Permanent Resident .Can10 said:
My friend don't mind it but it is the fact that some new immigrants got PR just to use it as Emergency Shelter Alternative.
Now you are to be Canadian so act as Canadian and invest in Canada.Dont hesitate to pay legal taxes .If everyone stop to pay taxes how the system will work ?
Make Canada your new home not an alternative place.
Thanks
It will be taken twice. The whole idea of Canadian taxation is you get more deductions as you make less money. Once she start making money, that amount will be reduced by her net income. So suppose she made 5,000 in 2011 then her tax free portion will only be(10,527 - 5,000).
I disagree with Kanamen and mitali. I think you are very smart man trying to invest in what you know and also diversify your portfolio to secure your family cost of living. That way you reduce the possibility of becoming a public burden when you are in Canada. I have seen so many people trying to invest in Canada without really understanding the system as new immigrants and lose their investments. Some 60%+ new small businesses fail within the first three years in Canada.
All you need to do is play by the rules and pay your taxes and I think that's what you are trying to understand in this thread. Also make sure you let CRA know of your foreign investment of $100K+. You are requred by the law and also act in your favor if in the future you decide to bring the money back to Canada they are tax free. Keep up the good work.
¬m2l
I disagree with Kanamen and mitali. I think you are very smart man trying to invest in what you know and also diversify your portfolio to secure your family cost of living. That way you reduce the possibility of becoming a public burden when you are in Canada. I have seen so many people trying to invest in Canada without really understanding the system as new immigrants and lose their investments. Some 60%+ new small businesses fail within the first three years in Canada.
All you need to do is play by the rules and pay your taxes and I think that's what you are trying to understand in this thread. Also make sure you let CRA know of your foreign investment of $100K+. You are requred by the law and also act in your favor if in the future you decide to bring the money back to Canada they are tax free. Keep up the good work.
¬m2l
Hi me2land,me2land said:
I have no doubt that Can10 was making a smart move to try and understand/calculate the taxes he has to pay in Canada on his overseas investment.....the ultimate reason to SECURE HIS FAMILY's COST OF LIVING.
I have clearly written that he and anybody having world wide income should be paying taxes, irrespective of the amount and play by the rules and you too agree on this opinion of mine and Kanamen's.....so I fail to understand the point of "Disagreement".
I have no expertise on nitty-gritty of the Tax calculations and thus I did not comment on that aspect of Can10's query.
Mitali
Dear Kanamen,
My reply to your comments in red:
One thing is disturbing me from start to end that you always seeking to invest out of Canada, to save taxes and making money but you never intend to dedicate to Canada. The proof is your intention to invest on property outside Canada.
Is investing outside Canada a crime? Is it against Canadian law? Is it shameful socially? Is it a sin? I believe for as long as I am declaring all my overseas investments to CRA and paying taxes appropriately on earning generated from that investment, I am not doing any wrongful deed. On the contrary I am ensuring some kind of regular income for me and my family thereby minimizing my chance of becoming burden on Canadian social insurance system in case I am jobless. On the other hand, I am contributing in Canadian economy by bringing my investment yields into Canada. Many Canadians have invested in real estate abroad. The main reason being the quality and affordable real estate abroad and better return on capital. I know some markets which offers 8 to 12% ROI. What do you think those Canadians are not faithful with their country? Canadian government invest hugely overseas, are they doing something against their own country?
Why dont you think to invest in Canada as a Canadian Permanent Resident.
Although I can see a great deal of suspicion behind your comments, yet I would like to elaborate this point. I am not a businessman, Canada is a new country for me. I don't know how and where in Canada I should invest my hard-earned money in 26 years of my employment. Fixed deposit in Canadian banks cannot generate more than 1 to 1.50% annually. Under such a situation, the only option left in hand is to invest some more thousands of dollars in a country where I already have some investment since long years. I hope living in Canada for 3 years would be enough for me to understand Canadian market and to ultimately consider transferring all my investment into Canada; even if I am unable to take a decision at that point in time, there is no harm in maintaining overseas investment for some more years and paying taxes to Canadian government on the yields. Both me and CRA are benefited.
Now you are to be Canadian so act as Canadian and invest in Canada.
I did not ask an advice on how to be a Canadian or act like a Canadian. You better save your words for some other relevant occasion. I am happy that some of the members understood my question and replied to the point.
Dont hesitate to pay legal taxes .If everyone stop to pay taxes how the system will work ?
Have I ever mentioned on this thread that I want to save taxes or even evade taxes? I wish you had gone through all my posts carefully before making such comments. You might have observed that some of the replies here suggested not to declare overseas investment to CRA, but my intention since beginning was very clear and without any doubt; I would continue to act as honest and faithful citizen and want to declare whatever is in my possession, in Canada or outside Canada. Original concept of starting this thread was for me to know how much of my saved money should be invested abroad to earn $12,000 net after deduction of Canadian tax. At this point I would once again like to convey my gratitude and heartiest thanks to dear me2land who picked up and understood my query in its true sense and demonstrated a positive mindset throughout.
If you still have some doubts in mind, I would be very happy to clarify.
Thanks,
Can10
My reply to your comments in red:
One thing is disturbing me from start to end that you always seeking to invest out of Canada, to save taxes and making money but you never intend to dedicate to Canada. The proof is your intention to invest on property outside Canada.
Is investing outside Canada a crime? Is it against Canadian law? Is it shameful socially? Is it a sin? I believe for as long as I am declaring all my overseas investments to CRA and paying taxes appropriately on earning generated from that investment, I am not doing any wrongful deed. On the contrary I am ensuring some kind of regular income for me and my family thereby minimizing my chance of becoming burden on Canadian social insurance system in case I am jobless. On the other hand, I am contributing in Canadian economy by bringing my investment yields into Canada. Many Canadians have invested in real estate abroad. The main reason being the quality and affordable real estate abroad and better return on capital. I know some markets which offers 8 to 12% ROI. What do you think those Canadians are not faithful with their country? Canadian government invest hugely overseas, are they doing something against their own country?
Why dont you think to invest in Canada as a Canadian Permanent Resident.
Although I can see a great deal of suspicion behind your comments, yet I would like to elaborate this point. I am not a businessman, Canada is a new country for me. I don't know how and where in Canada I should invest my hard-earned money in 26 years of my employment. Fixed deposit in Canadian banks cannot generate more than 1 to 1.50% annually. Under such a situation, the only option left in hand is to invest some more thousands of dollars in a country where I already have some investment since long years. I hope living in Canada for 3 years would be enough for me to understand Canadian market and to ultimately consider transferring all my investment into Canada; even if I am unable to take a decision at that point in time, there is no harm in maintaining overseas investment for some more years and paying taxes to Canadian government on the yields. Both me and CRA are benefited.
Now you are to be Canadian so act as Canadian and invest in Canada.
I did not ask an advice on how to be a Canadian or act like a Canadian. You better save your words for some other relevant occasion. I am happy that some of the members understood my question and replied to the point.
Dont hesitate to pay legal taxes .If everyone stop to pay taxes how the system will work ?
Have I ever mentioned on this thread that I want to save taxes or even evade taxes? I wish you had gone through all my posts carefully before making such comments. You might have observed that some of the replies here suggested not to declare overseas investment to CRA, but my intention since beginning was very clear and without any doubt; I would continue to act as honest and faithful citizen and want to declare whatever is in my possession, in Canada or outside Canada. Original concept of starting this thread was for me to know how much of my saved money should be invested abroad to earn $12,000 net after deduction of Canadian tax. At this point I would once again like to convey my gratitude and heartiest thanks to dear me2land who picked up and understood my query in its true sense and demonstrated a positive mindset throughout.
If you still have some doubts in mind, I would be very happy to clarify.
Thanks,
Can10
Can10 said:
Thanks for the detailed post as it is throwing light on your true intention. The original and follow up threads however were perceived to be elusive to understand potential ways to invest in another country(Just before landing in Canada....very unusual) and understand the tax norms surrounding it hence my response to apply the investment in Canadian soil. Good to know however that it is something that you may plan to opt for in the long run.
As I saw a mixture of responses here regarding the approach that must be taken, with no pun intended, I was being transparent in what is the best suited approach. Now that you have inclined it is for the best, I wish you good luck with your finances & the journey to Canada!