Tax on overseas rental property (NZ)

[canuknz]

Hi,
I've been looking through the forum and haven't found the info I'm looking for. Here's the situation:

We have a property here in NZ that we'd like to rent when we move back to Canada. Although the property has increased in value since we bought it, given our mortgage payments, we will rent it for a small loss (such is the Auckland property market). We'd really like to hang onto it until we retire (probably in Canada but possibly in NZ) or of course we may have to sell if we need the money at some point. We won't buy our own home in Canada until we can save a deposit from scratch.

Here are the questions:

(note there is no capital gains tax in NZ currently, but may be by the time we retire)

Will we have to pay tax in Canada when we sell the property?
Can we claim a loss on the property for our Canadian taxes?
Any other advice on what we need to do before we make the move to Canada?


I would appreciate any help/advice.

 

[steaky]

Hi,
I've been looking through the forum and haven't found the info I'm looking for. Here's the situation:

We have a property here in NZ that we'd like to rent when we move back to Canada. Although the property has increased in value since we bought it, given our mortgage payments, we will rent it for a small loss (such is the Auckland property market). We'd really like to hang onto it until we retire (probably in Canada but possibly in NZ) or of course we may have to sell if we need the money at some point. We won't buy our own home in Canada until we can save a deposit from scratch.

Here are the questions:

(note there is no capital gains tax in NZ currently, but may be by the time we retire)

Will we have to pay tax in Canada when we sell the property? maybe
Can we claim a loss on the property for our Canadian taxes? if you are eligible
Any other advice on what we need to do before we make the move to Canada? know the price of your property and get someone to take care the property while you are in Canada


I would appreciate any help/advice.

 

[NetMecca]

Hi

Will we have to pay tax in Canada when we sell the property?

- Any income that you earn outside of Canada, while residents of Canada, will be treated as income from a foreign source, and need to be declared accordingly. The capital Gains tax threshhold is fairly high, so unless you make a lot of profit this will not likely prove a major issue. If you expect a lot of capital gain, I would suggest you spend some time with a tax accountant. They might have some suggestions of how best to deal with it. (maybe trust or other financial instrument). Evidence of your property purchase price could prove handy to have for establishing this.

Can we claim a loss on the property for our Canadian taxes?

this might be useful :
http://www.cra-arc.gc.ca/tx/tchncl/ncmtx/fls/s5/f2/s5-f2-c1-eng.html

Any other advice on what we need to do before we make the move to Canada?
Make sure all your out of country tax returns are up to date, as you may need these to support future claims of credits in Canada

Good Luck