Tax payable in Canada on U.K. rental income?

[revbillw]

My wife and I recently moved to Canada and have been renting out our U.K. home whilst we decide where to buy in Canada. I have been paying full U.K. income tax on the rental income as a non resident of the U.K.. Does anyone know if I have to declare anything or pay any tax on this rental income in Canada?

 

[jjp297]

@revbillw

Does anyone know if I have to declare anything or pay any tax on this rental income in Canada?

Yes you report the rental income and taxes paid in the UK on your CDN tax return.

CDN tax residents report worldwide income from all sources.

 

[traciethered]

@jjp297 Ugh I hate UK returns and FTC. CRA has been extra picky due to the tax year being different and not allowing UK tax paid for the year ending in the same year as the Canadian tax year as the FTC. Their tax year ends Apr 5/22, CRA won't allow you to use that payment on your 2022 Canadian return, they want it split proportionally...I know it's in the ITA, I just hate doing them hah.

 

[christinamarie7788]

@revbillw Besides worldwide income, you will also need to report this as foreign property with a value over $100k in Canada and file form T1135. Eventually you will be taxed over the capital gains.

 

[revbillw]

@christinamarie7788 Thanks! I’ll look into that right away

 

[85justine]

@revbillw There is a tax treaty between Canada and the UK.

The country in which "immovable property" is located can tax income derived from that immovable property (article 6 of the tax treaty). Canada avoids double taxation by crediting you the tax paid on that income.

As Felix said, you must report the income, but you also report the foreign taxes paid. If your taxation rate is higher in Canada than in the UK, you could still owe taxes on that income here. The rental income counts as income when determining your eligibility for various benefits.

 

[revbillw]

@85justine As my only income in the U.K., I’m entitled to a tax feee allowance (c.£12,500pa) which offsets a lot of the rental income. Am I understanding you correctly that Canada will ask for a top up of any income taxed at below my income tax rate here based on my global income? That would be a bitter pill to swallow

 

[redhead50]

@revbillw Did you find an answer to this? In exactly the same boat and was hoping my personal allowance wouldn't be taxable as we are only here for a year

 

[revbillw]

@redhead50 I did find an answer via a specialist accountant with experience in Canada and the U.K.

I believe the personal allowance is protected in some form but not sure how. If you like I can share the accountant’s details via private message?

 

[redhead50]

@revbillw Yes please do that would be amazing. Thanks so much. Glad to hear there may be hope! Taxes are a killer is NS

 

[mirawga]

@revbillw Could I also get their contact please? I have a similar situation. I did it wrong over a year ago without knowing.

 

[andiegirl]

@revbillw Could I please get their details?

 

[revbillw]

@andiegirl Check PM

 

[resjudicata]

@revbillw In a similar situation. Could i get their details please?

 

[revbillw]

If relevant we live in Ontario