Non Residential Tax withheld from British Citizen selling Canadian house -

Hello

I have just sold a house in Ontario Canada which I have had for nearly two years.

I paid 130000 pounds for it and just sold it for 138000 pounds.

The lawyer in Canada said that I should ask someone in England about being able to claim back the non residential tax which will be about 2000 as he thinks there is a deal between England and Canada Governments regarding this.

I am at a loss as to who to ask and what to do as this is the first time I have done this kind of thing.

I await your reply

Regards


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david ingram replies:

When the property was sold and your representative filed the T2062 to get the Withholding tax reduced from 25% of 138,000 to 25% of the 8,000 pounds profit, he or she was not allowed to deduct the real estate commission, legal fees and any other  costs associated with the sale and for the record, costs do NOT include flying from London to Toronto to sign the paperwork but would include courier expenses to send the paperwork back and forth, legal fees, notary fees, etc.

To get all of the 2,000 pounds back, you need to show 8,000 pounds worth of expenses which is possible if you paid a 6% RE Commission. 

For instance, legal was likely about 500  and the Real Estate Commission 8,500.00 pounds.  If this is the case, you will get a full refund. 

If you paid a 5% RE commission, your commission (inc GST) is $7240 .plus $500 for a total of $7,740 and you would  eave 'just a little bit' behind because of the  260 pound profit.

If you sold it without a RE Commission, there would be very little tax refund BUT you are still required to file a Canadian Return to report the sale.

We, of course would be quite happy to look after that for you.  The cost would likely be $535.00 Canadian inc GST.

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On Mar 14, 2008, David Ingram wrote:

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Phone consultations are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. ($472.50 with GST if in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.
This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.
$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.
 
$1,200 would be the same with one rental
 
$1,300 would be the same with one business no rental
 
$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.
 
$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above and you moved in and out of the country.
 
This is just a guideline for US / Canadian returns
 
We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up.
 
With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.
 
A Business for $400 - Rental and business likely $550 to $700
 
And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.
 
Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up.
 
TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.
 
8891 forms are generally $50.00 to $100.00 each.
 
18 RRSPs would be $900.00 - (maybe amalgamate a couple)
 
Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund. 

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.
 
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