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Arthur Rubin
Arthur Rubin, Tax Preparer
Category: Canada Tax
Satisfied Customers: 34
Experience:  Tax preparer with 23 years experience, including US/Canada tax returns.
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My husband inherited land in northern Ireland from his mother

Customer Question

my husband inherited land in northern Ireland from his mother when she passed away about 15 years ago. we had planned on building a cottage on it and live there 4-6 months every year after we retired but lost a lot of money in 2008 in the stock market crash and can't afford to do that now. We did not declare the foreign property on his tax return as we did not make any income on it as it was bare land and his brother just mowed it and kept it looking decent in exchange we let him use it for his cattle. Now we want to sell it (to his brother) but have a large capital gain and it is now worth more than $100,000.000. Will we have to pay penalties for every year we did not fill out the foreign propery paperwork for revenue canada since it was worth more than $100,000 and how much will that be?Will we have to pay capital gains taxes since there is a big capital gain now.
Submitted: 2 years ago.
Category: Canada Tax
Expert:  Lane replied 2 years ago.
Hi,.YOu WILL have to report the capital gain if it's sold for more than purchased..However, you must make the case that this is EXACTLY as you have described - property held for personal use, with the intent to build for yourself there..Real estate owned in foreign countries, and held strictly for personal use, are not considered “foreign property," for purposes of that general question on the T1 general form. ... Curiously, the taxpayer that US stocks or ETFs with a cost of more than $100,000 (even in a Canadian investment brokerage account), must answer “Yes” to the question in T1 General and file Form T1135..But if this was property help for PERSONAL use, the answer is no, and no T1135..So document in any way possible that is indeed personal use property that you have only recently decided to sell, but, yes that gain (selling price minus investment) IS reported (50% OF that gain uncluded are regular income)..You'll see the details of what constitutes “specified foreign property” in CRA’s eyes, in the information provided in Form T1135 Foreign Income Verification Statement. In it, CRA defines “shares of non-resident corporations held by the resident filer or on deposit with a Canadian or foreign broker” and “interests in mutual funds that are organized in a foreign jurisdiction” as specified foreign property..Please let me know if you have questions..Lane