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Questions about Canada taxation on foreign properties

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Questions about Canada taxation on foreign properties captial gains tax

Accountant's Assistant: What are the assets or property for this capital gain?

Hong Kong

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2/20/2023

Canadian Tax Expert: Gagan, CPA, Certified Public Accountant (CPA) replied 3 months ago

Gagan, CPA, Certified Public Accountant (CPA)

Category: Canada Tax

Satisfied Customers: 1,865

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Hi, thank you very much for reaching out and using our platform. My name is ***** ***** it’s a pleasure to assist you.

Can you please elaborate a bit further on your question?

Are you asking about paying tax in Canada for a foreign property being sold?

Customer reply replied 3 months ago

Thank you Gagan. I am a Canadian citizen living in Hong Kong for 30 years now. I am considering returning to Canada. If I do return and become a resident here, and having still have a property in Hong Kong. When I sell that property later on in my life, do I have to pay tax in Canada?To elaborate further, I understand I need to pay capital gains tax on a foreign property once it is sold and has a profit. Does Hong Kong have a special treaty with Canada that so I don't have to pay tax in both countries?

Canadian Tax Expert: Gagan, CPA, Certified Public Accountant (CPA) replied 3 months ago

You’re welcome, that’s a great question. You will have to pay in that case unfortunately. It would be capital gains tax. If the value of the property exceeds $100,000 you will have to fill out the following form.

https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/foreign-reporting/questions-answers-about-form-t1135.html

You can find details about it here

Since you are a citizen in Canada, you would only need to report this on your Canadian tax return, so no tax for any potential tax return in China. Otherwise you’d be getting taxed twice for the same thing.

Customer reply replied 3 months ago

The capital gains, how is it calculated? For example, I bought that house 30 years ago for $100, then I become resident and move back to Canada now, and the house is worth $120. When I sell it 10 years later for $150. The capital gains will be $150 - $120? Or $150 - $100? Sorry I am not good at this at all.

Canadian Tax Expert: Gagan, CPA, Certified Public Accountant (CPA) replied 3 months ago

Just to clarify further, because you’ve been living in Hong Kong, this may have the possibility of being claimed as a principal residence. Is this a personal use property or an investment?

Customer reply replied 3 months ago

It is my personal principal residence.

Canadian Tax Expert: Gagan, CPA, Certified Public Accountant (CPA) replied 3 months ago

Yes that would actually work out well in that case. Because it is your principal residence. You would simply need to designate it as such on your tax return upon the sale of the property. Then you would not have to pay any taxes on the gains

https://ca.rbcwealthmanagement.com/documents/29328/1605186/Principal+residence.pdf/5c86c6a4-6a3d-449e-944c-c3730f0a6354

Canadian Tax Expert: Gagan, CPA, Certified Public Accountant (CPA) replied 3 months ago

You can find details about this here for further information.

Gagan, CPA, Certified Public Accountant (CPA)

Category: Canada Tax

Satisfied Customers: 1,865

Experience: Expert

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Gagan, CPA and 87 other Canada Tax Specialists are ready to help you

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Customer reply replied 3 months ago

Thank you so much. I will go study the links you sent and get back to you if I have more questions. Thank you Gagan for your help.

Canadian Tax Expert: Gagan, CPA, Certified Public Accountant (CPA) replied 3 months ago

You’re very welcome. I’m glad to be of assistance. Thanks for your time, and have a great day!

Customer reply replied 3 months ago

Thanks!

Canadian Tax Expert: Gagan, CPA, Certified Public Accountant (CPA) replied 3 months ago

No problem at all!

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