david ingram replies:
You have discovered one of BC's great mortgage brokers in Glen Kelleway ([email protected] - 604-476-0053)
Both houses in the UK are subject to Capital Gains Tax in Canada.
However, whether you came from England, Spain, Indonesia or the USA, the ACB (adjusted cost base) of the houses and anything else you may have of value, will be the value the day you arrived in Canada And, in your case, this is dependent upon the area where your houses are located.
As you will see in the following graph - http://www.primelocation.com/house-price-index/
Houses in London are worth more today than they were in November 2007. (the light blue line)
Houses in the UK in general are worth less than the day you left. (the green line)
Since the green line includes London, it is fair to say that your houses are worth significantly less than the day you left.
However, you also have to deal with forex or Foreign Exchange because for Canadian tax purposes, it is the value in Canadian Dollars on the day you left the UK and arrived in Canada that matters.
I remember well when one GBP was worth FIVE Canadian dollars. However, today it was only worth $1.73 although it was better in 2007.
On November 15, 2007, the forex for GBP to Cdn dollar was 2.0084
If somehow or other the UK house was worth 250,000 GP, that would be $502,100 Canadian dollars
Today, Dec 14, 2009, the GBP has gone down about 14% relative to the Canadian dollar and is only worth 1.72490
If you had sold the house today Dec 14, 2009, for a net of $287,500 GP, the value in Canadian dollars is / was $495,908.75 and you would have no tax to pay to Canada.
However, I do not know what use the houses were put to. If they were rented, you need to file your UK returns RIGHT NOW. We can do that for you although you may have done so already through your UK accountant.
The rents also need to be reported on your Canadian return.
I have to say that it is usually easier to have one individual do both countries than to get two people to figure out what the other did..
Hope that this helps.
And, again, my apology to Glen Kelleway for not looking after his client sooner.
He is undoubtedly, one of the better mortgage brokers around and one of the 1 out of a 100 who truly understands how to make the interest paid on a Canadian mortgage tax deductible AND takes the time to explain it to his clients.
If you 'really' only have a single question requiring a 'couple' of minutes, you can try phoning me for free as part of the following.
-Most Wednesday evenings, from 6 to 7 PM Vancouver (Pacific - LA, Seattle) time, I interview others and answer US Canada, Great Britain, Spain, Indonesia, Mexico, etc. Tax and immigration questions. GOTO www.david-ingram.com - the North American phone number is (866) 980-0499 - the local number in the lower mainland is (604) 980-0321.-
- You might try calling Fred Snyder's weekly radio program for an answer.
Fred Snyder's "IT'S YOUR MONEY" radio show.
Fred does a show on CISL, 650 AM on the dial in Vancouver from 9 to 11:00 AM every Sunday - call 604-280-0650 or 1-877-280-0650 LISTEN LIVE IN SAUDI ARABIA AT WWW.AM650RADIO.COM (hit button in top left hand corner).
I guest on the shows on the First Sunday of each month. November 1 and Dec 6, 2009 and then Jan 3, 2010.-
CEN-TA Cross Border Services - Tax, Visas, Immigration