Posted on: 31-05-10 15:13:38
My friend is putting up his house for sale very soon. He may make a good profit, abt $50k. Is there any limitation in India for taking the entire money? As I understand there is no capital gains tax in Canada. If he declares that he is not a resident anymore (he may have to I think), will he get taxed for the house he sold?
KM
Quote:
Originally posted by KumarM
............ As I understand there is no capital gains tax in Canada. ............
KM
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Who said that? If it is correct can I get that in writing too!! It won't hold water.....
I am posting this to the wrong thread. But hang on to it anyway.
http://www.remit2india.com/remittance/jsp/r2iSearchLp_US.jsp?creative=moremoney&marketingReference=google_search&gclid=CLDl8oqv_aECFUJx5QodlTeoEQ
I will provide you here with a table for the Cost of Living Index and explain a little and you will have to get the help of an accountant or a Auditor there in India to get all or most of the money into Canada. (Upto a Million Dollars an Year and each year)
http://www.taxguru.in/income-tax/cost-inflation-index-for-financial-year-2009-10-and-assessment-year-2010-11-notified.html
Say your friend bought the house in 1981, 1st of April, and the value then say was a Rs.100/- and then sold it today for Rs.632, then he does not pay any Capital Gains Tax. Anything over and above that could be sheltered up to a sum of 50 Lakhs. That is a whopping sum. If he has gains that are more than that, then he has to pay taxes on the gains or to avoid taxes on that, s/he buys another property and shelters it and holds onto it for another four years and derives a little gains on that, so on and so forth. You can juggle with the table to see what the tax break he will get.
See the first link, which says that they will give you free transfer through Remit 2india and a decent exchange rate too. Hang on to that link. Might come in handy.
Freddie.
If say your friend moved out of India on 31st of December 2008 and landed here on 1st of January 2009, the Canadian Government considers that he sold that property on 1sy of January 2009. (Deemed disposition of the assests) If he made a loss on that value, which he can show by juggling the figures, then he can claim the loss he incurred on any FUTURE GAINS he makes here in Canada. If he did make a profit, he will have to try and catch up at that end with the tax people there.(IRS) and gets that amount as capital gains here and pays taxes on it once more, unless he can show that he paid taxes there, which he cannot because he might have held it for more than three years there, in their books which exempts him there. What a travesty in taxes. They now will want tax on the gains here for the year 2009, this year.(2010)
Freddie.
If he is the same friend who wants pension from Canada, then I do not think it is possible to cut off ties with Canada and declare oneself as nonresident.
http://www.cra-arc.gc.ca/tx/nnrsdnts/ndvdls/nnrs-eng.html#d Residential ties include:
* a home in Canada;
* a spouse or common-law partner (see the definition in the General Income Tax and Benefit Guide) and dependants in Canada;
* personal property in Canada, such as a car or furniture;
* social ties in Canada.
Other ties that may be relevant include:
* a Canadian driver's licence;
* Canadian bank accounts or credit cards;
* health insurance with a Canadian province or territory.
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Quote:
Originally posted by KumarM
My friend is putting up his house for sale very soon. He may make a good profit, abt $50k. Is there any limitation in India for taking the entire money? As I understand there is no capital gains tax in Canada. If he declares that he is not a resident anymore (he may have to I think), will he get taxed for the house he sold?
KM
Hi KM,
Your post is not very clear. You have to clarify where your friend is and where is he selling the house, in India or in Canada.
Freddie has given you reply thinking your friend is selling a house in India. However, I got the impression that your friend is a Canadian Resident and selling his principal home and leaving Canada for good. If that's the case then Freddie's reply may not be helpful to you. If it is otherwise, then what I am replying may not make sense to you.
If your friend is in Canada and selling his principal residence then he would not be paying any capital gains tax in Canada. And he can remit all the money to India without any taxes and also move there. He can declare his status to CRA and they will determine whether he is a resident for tax purposes or a non resident for tax purpose. There are some forms which he can fill and send to CRA and they will give the ruling.
So, before we proceed further, please clear the situation. Also, I would request you to update your location as well.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
I posted the response thinking that MK's friend is selling his house in India. Actually he is selling it here. And as such there is no capital gains here in Canada for the principal home. So, sell it first and then ask the CRA if he is then considered a Non Resident Canadian..
Freddie.
Sorry for any confusion. We technocrats sometimes dont know how to write.
My friend has to go back to India and will collect his govt pension (not CPP). He needs to sell his house here in Canada in the next couple of weeks (we met with a RE agent this evening to discuss). I think he will have abt $50k (profit) after paying off the mortgage, penalty, comission, etc.
I am wondering,
1. If he can take all that money to India with him?
2. Is there any restriction on the money carried from here to India?
3. Now the dilemma is the capital gains tax. Should he declare that he is leaving Canada this year or should he wait till next year to declare that he is leaving. Anyone can sell their house and live in a rental place. Would that argument work in his favour?
(I am just helping him out in this issue as he has tonnes of things on his mind right now)
KM
PS - I have explained abt my discussion with CRA reg tax on non residents (residing in India) in another thread here.
