Personal Finance

Tax implication on selling foreign inherited property

  • Last Updated:
  • Sep 20th, 2018 11:22 am
[OP]
Member
Aug 16, 2006
212 posts
61 upvotes

Tax implication on selling foreign inherited property

I inherited a foreign property approx. 8 years ago and at the time it was worthless, but now it's worth about 300k CAD. The property was basically sitting there collecting dust all this time and now a developer had approached me about buying the land. I never reported this property to the CRA because I was told I didn't need to. Anyways, my question is what are my tax implication if I would sell at 300k?
4 replies
Newbie
Nov 9, 2008
33 posts
14 upvotes
Toronto
You should consult with your tax accountant. This is not advice.

The foreign jurisdiction may have right to tax your gain. So buyer may withhold taxes from your proceeds to the government, and you may need to file a tax return to get all or some of your money back.

If you're a resident in Canada, CRA will tax the gain (perhaps at capital gains rate). However, you should be able to claim a foreign tax credit to offset the Canadian taxes with foreign tax paid. The foreign tax credit is to eliminate double taxation.
Deal Addict
Jan 30, 2012
1579 posts
937 upvotes
TORONTO
dimsum69 wrote: I inherited a foreign property approx. 8 years ago and at the time it was worthless, but now it's worth about 300k CAD. The property was basically sitting there collecting dust all this time and now a developer had approached me about buying the land.
Ok, good for you. You would be better off in terms of Canadian taxes if you could show a higher value to the property when you inherited it.
dimsum69 wrote: I never reported this property to the CRA because I was told I didn't need to.
That is correct. You would have had to declare it to the CRA if the fair market value when you inherited it was 100k or over https://www.taxtips.ca/filing/foreign-a ... orting.htm
dimsum69 wrote: Anyways, my question is what are my tax implication if I would sell at 300k?
You will pay capital gains on the 300k gain. If there is a tax treaty between Canada and this other country you might be able to deduct from your capital gain any foreign taxes paid.
Member
User avatar
Sep 6, 2018
212 posts
90 upvotes
50% of the capital gains for canada is taxed.
So if you acquired the property at $0 and sold for $300,000... you will be taxed on $150,000

I would estimate it to be around 20% to 30% for most people... unless you are in a higher tax bracket.. so canadian tax would probably be around $50,000 just a very broad estimate...

if you had to pay tax in the foreign country, most likely you can deduct it from what you owe CRA for this.

Would suggest you to speak to an accountant to get more specific numbers.
Member
Jul 3, 2002
293 posts
93 upvotes
talk to your accountant. The cost i think is marked as the value you inherit it and you will be taxed on the capital gains you made on top of that cost. Also, I think it depends on if there is a tax treaty between that country and Canada to avoid double taxation. Talk to an expert and sort this out as there may be issues with not declaring ownership of foreign property over the years as well.

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