Dear David,
I am a Canadian citizen. I was a factual resident in Finland for 10 years and have returned to Canada - 2007. The house that I own in Canada has been rented the entire time when owning it, from 1990 until now. I have never lived in this house.
I spoke to a CCRA employee about capital gains tax when selling a house when living in Canada or living in Finland. She happened to mention that there might have been an amendment in the Canadian 2007 Federal Budget. She read somewhere that when the capital gain is less than $350,000 CAD, there would be no tax. This would even pertain to me when never living in the house.
I contacted the Department of Finance 3 times to find out the true answer. No answer yet. I’ve checked their website also. I’m not anxious about moving into this house and get stuck in it for 2 years. Culture shock has taken place and it will also remain. This is a fact. Some day in the near future, I wish to return to Finland and live there.
Furthermore, I am seriously considering getting a Finnish citizenship. Deadline is May 2008. Very much easier and cheaper to do this in Canada than in Finland. But, I don’t know if both countries can tax me, when having a dual citizenship during retirement.
What should/can I do before retiring? Sell the house in Canada or when living in Finland, or …? I don’t even know anything about the amendment idea. If there was an amendment, I would simply continue to rent the house and not have to live in it. The house of course would be a so-called ‘mattress’ to fall back on when moving back to Finland and then have to return to Canada for some unknown reason.
This scenario no doubt looks like a ‘cobweb’. What are your thoughts about this?
Br,
---------------------------------------------------------
david ingram replies:
There is no such thing as a $350,000 capital gains exemption on a house and never has been.
If you have never lived in the house and sell it, it is subject to capital gains tax in Canada. If you were to move into it, IT WOULD BE A DEEMED DISPOSAL AND is is subject to capital gains tax the day you move in although if you never claimed CCA (capital cost allowance or depreciation) when you move in you can defer the capital gains tax until actual sale by filing an election uder section 45(3) OF THE INCOME TAX ACT.
.I am going to ignore the rest of the question. If these things are a problem, you need to do a consultation with me or someone like me. There ae too many specific "what ifs" that will not or never apply to my general audience to deal with in this free forum.
I hope that you have been filing your rental returns under Section 216(4) while out of the country. That would involve forms 1159 and T776.
This older question might help a bit.
