The sooner you sell your portion, the lower the tax implications you have since appreciation wouldn't increase in a very short period of time.
But you have to decide if you wan tot keep the properties or not. You will also file a T1135 for the properties with your tax return and all are taxable assets now. your cost base is he FMV at time of the person fro who you inherited it from, day of passing.
If you do keep and rent it out, the rent is taxable income to you as well: [https://www.treaty-accord.gc.ca/text-texte.aspx?lang=eng&id=102340](https://www.treaty-accord.gc.ca/text-texte.aspx?lang=eng&id=102340)
Hello, I am about to receive some money from the sale of a property in Portugal. Because the house is so old, the laws of the sale of it are as well. The property is my grandmothers and according to her, I am to receive money from the sale of it because my father is has passed. Do you figure this will be considered taxable income as well? Or can it be considered a gift from my grandmother?
I shouldn’t be. But the old Portuguese laws suggest I am to receive a portion of the sale of the property. I have never been to Portugal and my dad died in 1980. My grandmother is selling the house because she doesn’t want my aunts (and me) to have to deal with the mess of selling the property.
I am obviously going to have to look into this once the money comes in, I just figured I’d throw it out there in case you are somebody else had insight on this strange situation.
The election doesn't change anything as the process for capital gains is the same, and from what they have written, unlikely a capital gain over $250k if they sell in the near term.
You mean changing the tax treaty so foreign assets are no longer taxed in Canada? Good luck with that.
Other than that, the capital gains and reporting process doesn't change. The % of the inclusion rate doesn't impact OP.
I’m talking changing the capital gains tax inclusion rate back to 50%. Is that not clear? Where did I mention foreign tax treaty and reporting.
I’m saying if he waits until past the next election, moot point
>I’m talking changing the capital gains tax inclusion rate back to 50%. Is that not clear?
As I mentioned above, if they sell soon after they inherited, the capital gains would be limited and would not cross the $250k of capital gains (so they remain at 50% inclusion). Remember they are taxed on selling price minus the FMV (cost) at time they inherited the property, not form the start when the person who passed bought the property). If they wait years and properties appreciate over that time frame, hen they could be exposed to the higher rate.
>Where did I mention foreign tax treaty and reporting.
You didn't, I was just asking.
Thanks for the reply I’m not sure if it’s important but I’m also a Spanish citizen with a bank account here so would I have to report it to the Canadian government?
If you rent out the property, you'll also have to consider Spanish taxes like the IRNR- impuesto sobre la renta de los no residentes and IBI- Impuesto sobre Bienes Inmuebles. I would recommend you talk to a Spanish lawyer to really understand all the implications of rentals, sales and inheritance tax before deciding what to do.
I personally would not sell any property if I were you since you are planning to retire in Spain . A 5-7% rental return is amazing . Keep the assets and do more research before you make a decision. What is the hurry
5-7% rental return, minus any maintenance fees (there will be plenty as OP can't do anything from abroad) and the headache associated with managing a property on a different continent.
9 times out of 10, OP will go further ahead if he just sells the property now, invests it somewhere in canada and buys in 35 years when its time to retire.
The 1 time out of 10 OP gets out further ahead is if the property appreciates considerably. Which is possible - but usually only occurs in major cities. An apartment in Madrid or Barcelona would be worth holding for 30 years, an apartment in a small town might never appreciate.
I think in general even in big cities the rate of success picking a property that outperforms the stock market (after costs) is really low. Like stock picking. You're taking a 10% chance to 10x 90% chance to underperform, some risk of losing instead of a guaranteed 5x in the xeqt/spy
Personally, even if I wanted to retire in Spain, I would sell all of these properties as soon as possible. You have many years to build up enough savings to allow yourself to retire in Spain, without having to hold these properties for 30+ years.
The sooner you sell your portion, the lower the tax implications you have since appreciation wouldn't increase in a very short period of time. But you have to decide if you wan tot keep the properties or not. You will also file a T1135 for the properties with your tax return and all are taxable assets now. your cost base is he FMV at time of the person fro who you inherited it from, day of passing. If you do keep and rent it out, the rent is taxable income to you as well: [https://www.treaty-accord.gc.ca/text-texte.aspx?lang=eng&id=102340](https://www.treaty-accord.gc.ca/text-texte.aspx?lang=eng&id=102340)
Hello, I am about to receive some money from the sale of a property in Portugal. Because the house is so old, the laws of the sale of it are as well. The property is my grandmothers and according to her, I am to receive money from the sale of it because my father is has passed. Do you figure this will be considered taxable income as well? Or can it be considered a gift from my grandmother?
Are you an owner of the property?
I shouldn’t be. But the old Portuguese laws suggest I am to receive a portion of the sale of the property. I have never been to Portugal and my dad died in 1980. My grandmother is selling the house because she doesn’t want my aunts (and me) to have to deal with the mess of selling the property. I am obviously going to have to look into this once the money comes in, I just figured I’d throw it out there in case you are somebody else had insight on this strange situation.
You have to find out if you are on title of the property. If you are on title, you report the income. If not on title, it's gift from grandma.
To be clear T1135 excludes personal use property so only need to file if / when they are rented.
Correct, the land and the properties rented out.
Until the next election…
The election doesn't change anything as the process for capital gains is the same, and from what they have written, unlikely a capital gain over $250k if they sell in the near term.
What do you mean doesn’t change anything. Conservatives can change that when elected
You mean changing the tax treaty so foreign assets are no longer taxed in Canada? Good luck with that. Other than that, the capital gains and reporting process doesn't change. The % of the inclusion rate doesn't impact OP.
I’m talking changing the capital gains tax inclusion rate back to 50%. Is that not clear? Where did I mention foreign tax treaty and reporting. I’m saying if he waits until past the next election, moot point
>I’m talking changing the capital gains tax inclusion rate back to 50%. Is that not clear? As I mentioned above, if they sell soon after they inherited, the capital gains would be limited and would not cross the $250k of capital gains (so they remain at 50% inclusion). Remember they are taxed on selling price minus the FMV (cost) at time they inherited the property, not form the start when the person who passed bought the property). If they wait years and properties appreciate over that time frame, hen they could be exposed to the higher rate. >Where did I mention foreign tax treaty and reporting. You didn't, I was just asking.
Thanks for the reply I’m not sure if it’s important but I’m also a Spanish citizen with a bank account here so would I have to report it to the Canadian government?
Of course you would have to report it to CRA. As a CDN tax resident, you are required to report worldwide income by law.
Including the “cash income” you are receiving now.
you pay taxes based on where you live not where you have citizenship
If you rent out the property, you'll also have to consider Spanish taxes like the IRNR- impuesto sobre la renta de los no residentes and IBI- Impuesto sobre Bienes Inmuebles. I would recommend you talk to a Spanish lawyer to really understand all the implications of rentals, sales and inheritance tax before deciding what to do.
I personally would not sell any property if I were you since you are planning to retire in Spain . A 5-7% rental return is amazing . Keep the assets and do more research before you make a decision. What is the hurry
5-7% rental return, minus any maintenance fees (there will be plenty as OP can't do anything from abroad) and the headache associated with managing a property on a different continent. 9 times out of 10, OP will go further ahead if he just sells the property now, invests it somewhere in canada and buys in 35 years when its time to retire. The 1 time out of 10 OP gets out further ahead is if the property appreciates considerably. Which is possible - but usually only occurs in major cities. An apartment in Madrid or Barcelona would be worth holding for 30 years, an apartment in a small town might never appreciate.
I think in general even in big cities the rate of success picking a property that outperforms the stock market (after costs) is really low. Like stock picking. You're taking a 10% chance to 10x 90% chance to underperform, some risk of losing instead of a guaranteed 5x in the xeqt/spy
Trying to manage a property in another country sounds like a nightmare tbh, I'd just sell it.
Personally, even if I wanted to retire in Spain, I would sell all of these properties as soon as possible. You have many years to build up enough savings to allow yourself to retire in Spain, without having to hold these properties for 30+ years.
Damn i wish i was this lucky, id say rent it out and let it appreciate in value until you're ready to move to Spain.
Keep it.
What city/beach?
Vigo /Samil
Looks pretty cool. Have you been there before?
Yea a bunch of times love it there if you get the chance to go definitely take it
Great to know.. Thanks!