If you’re a Canadian considering purchasing a condominium or home abroad for rental income, it’s important you understand the rules that will apply when filing your income taxes.
I sometimes assist clients who are interested in buying foreign property, whether it’s a vacation getaway they will be using for their own enjoyment or an investment property they expect will bring rental income.
Through my travels and my more than 30 years as a Realtor in Ottawa, I have many trusted colleagues across the U.S. and abroad who can offer you their expertise in finding your dream property.
Many Canadians have years of enjoyment from such properties, but I always advise them to ensure they understand the tax implications, which will depend on how they use the property.
A recent article on REMonline.com, the monthly Real Estate magazine for Real Estate professionals, was a reminder. It reported the Canada Revenue Agency is planning to review six years of U.S. Real Estate transactions in an effort to find Canadians who are not complying with tax reporting requirements.
Canadian taxpayers who are re-assessed as a result could face penalties, if, for example, they have not reported U.S. rental income.
It’s important to understand the rules, which differ according to whether you are using the property mostly for your personal use or mostly for rental income.
For more details about the tax rules and what’s involved when you own foreign property, you can read the article here @ REMonline.
The article includes links to other useful information, including a summary of the CRA’s Foreign Investment Requirement Form (the T1135 Form). There is also a link to an article on the Voluntary Disclosure Program, which qualifying taxpayers can use to correct or make changes to previous tax returns.
If you’re looking for a referral abroad or are considering buying or selling property in the Ottawa area, I’d be happy to chat about the current market and conditions in your area.
You can read more about me and my team here. Feel free to give me a call, at 613-747-4747.