Q & A: Taxation of Property Owned Before Landing
Q. I own a house in my home country which I intend to sell after I land in Canada. I will declare it upon my landing along with other funds I intend to bring in Canada at a later stage.
1) Do I have to make an estimation of the value of my house, i.e., the money I will be bringing in Canada as a result of the selling?
2) Will I be subjected to paying an income tax on the money resulted from the selling, considering this is an assets I have prior to my landing in Canada?
Answer: You have asked as to the taxation in Canada on gains which accrued prior to your becoming resident in Canada.
Immediately before you become a resident of Canada, you will be deemed to have disposed of your home and have reacquired it at the fair market value. As such, you will pay tax in Canada upon the actual disposition of your house only on the gain which you earned after you became a resident of Canada.
An evaluation of the value of the house will be necessary to determine the fair market value at the time you became resident in Canada.
The nature of this facility is to provide a general response to a general question. Under no circumstances should anyone act on this information without obtaining analysis and counsel from a qualified advisor with respect to the specific situation.
Phillip Nadler, CA
Richter Usher & Vineberg