Hi all,
Feb 2009 - Bought principal residence house for $169 000 (Quebec)
Feb 9, 2015 - Bank evaluates house at $231 000
March 12, 2015 - Left Canada with family to go work in California under TN Status.
April 21, 2015 - Sell house for $224 900
Canada:
T2091 : 0$ because of real estate agent commision. (line 8).
T2062: (224 900 - 169 000) * 25% = $13 975
Notary fills in T2062 late by 6 days, send $150 check for penality.
Quebec:
TP-274 : 0$ because of real estate agent commision (line 8).
TP-1097: (224 900 - 169 000) * 12.875% = 7 197$
21K paid in taxes.
This doesn't seem right. My notary should have used the deemed disposition price at March 2015 instead of the buying price to calculates the capital gain, no ? (T2062/TP-1097)
She spoke with CRA, according to her, the guy wanted to withhold 25% of the sale price instead of the capital gain; she refused.
Who is right ? How do I get my money back ? Do I need to wait until Feb 2015 to fill taxes before everything is fixed ?
Thanks !
Selling Canadian house as non-resident, notary mistake ?
Moderator: Mark T Serbinski CA CPA
The "gain" is from purchase. It was never subject tto deemed disposition.
But, the gain should have been zero in all cases, since you get one year more than you lived in it, You should not owe any tax. It was your principal residence.
But, the gain should have been zero in all cases, since you get one year more than you lived in it, You should not owe any tax. It was your principal residence.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing 
Thanks Nelsona.
http://www.cra-arc.gc.ca/tx/nnrsdnts/nd ... g-eng.html
"When you leave Canada, you are considered to have disposed of certain types of property at their fair market value and to have immediately reacquired them for the same amount. This is called a deemed disposition, and you may have to report a capital gain."
And:
"This applies to most properties. Some of the exceptions are:"
"Canadian real or immovable property, Canadian resource property, and timber resource property. For more information, go to the note below;"
And
"You may elect to declare a deemed disposition on the first two properties listed above. To declare a deemed disposition on these properties, complete Form T2061A, Election by an Emigrant to Report Deemed Dispositions of Property and any Resulting Capital Gain or Loss."
Which implies that I should be able to perform a deemed dispositon on the house with T2061A for the date I left.
However, how do forms T2062 and T2091 are supposed to talk with each other ? One tells me I owe 0 tax, the other 25%.
--
My notary sent these 21K checks because she said her professional responsability requires it and somebody at CRA told her to.
Q. Who is right ? A. No tax
Q. How do I get my money back ? A. ?
Q. Do I need to wait Feb 2016 ? A. ?
http://www.cra-arc.gc.ca/tx/nnrsdnts/nd ... g-eng.html
"When you leave Canada, you are considered to have disposed of certain types of property at their fair market value and to have immediately reacquired them for the same amount. This is called a deemed disposition, and you may have to report a capital gain."
And:
"This applies to most properties. Some of the exceptions are:"
"Canadian real or immovable property, Canadian resource property, and timber resource property. For more information, go to the note below;"
And
"You may elect to declare a deemed disposition on the first two properties listed above. To declare a deemed disposition on these properties, complete Form T2061A, Election by an Emigrant to Report Deemed Dispositions of Property and any Resulting Capital Gain or Loss."
Which implies that I should be able to perform a deemed dispositon on the house with T2061A for the date I left.
However, how do forms T2062 and T2091 are supposed to talk with each other ? One tells me I owe 0 tax, the other 25%.
--
My notary sent these 21K checks because she said her professional responsability requires it and somebody at CRA told her to.
Q. Who is right ? A. No tax
Q. How do I get my money back ? A. ?
Q. Do I need to wait Feb 2016 ? A. ?
Please read up on this, you are not liable for Cdn tax on principle residence for one year after departure. Please do better research.
there should have been NO TAX withheld, which gas nothing to do with deemed departure.
You will correct this at filing next year, not because of deemed but becasie of miscalculation on your forms.
there should have been NO TAX withheld, which gas nothing to do with deemed departure.
You will correct this at filing next year, not because of deemed but becasie of miscalculation on your forms.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
iT WAS YOUR PRINCIPLE RESIDENCE, no tax yes the tax was sent in because you did not file the proper proof to show it was your principle residence, you should never leave this to a Notary to do hire an accountant I do this all the time from Notary's who ask me to do it for them they are not tax experts and certainly should not try to be such, you now file a tax return for 2015 and ask for the entire tax back as a refund, you now have no choice but to wait till Jan 2016 to file a tax return to claim back the taxes from both govt you will get back all the tax that was sent in but only if you file and show that it was a sale of your principle residence that yielded no taxable gain.
JG
Specifically, your notary did not correct all gains on form T2062 (and its QC equivalent).
See box "(4) Exemptions" on the form, and refer back to the instructions on the form:
If you are claiming an exemption from tax, such as under a tax convention or a principal residence exemption, enter the exempt portion in
column (4). Attach a note detailing the calculation of the exempt amount.
They should also have attached Form T2091 (and its QC equivalent).
Hope he refunds you any costs that he chanrged you for doing such a lousy job.
See box "(4) Exemptions" on the form, and refer back to the instructions on the form:
If you are claiming an exemption from tax, such as under a tax convention or a principal residence exemption, enter the exempt portion in
column (4). Attach a note detailing the calculation of the exempt amount.
They should also have attached Form T2091 (and its QC equivalent).
Hope he refunds you any costs that he chanrged you for doing such a lousy job.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing
This story has gone a long way since then: I've recoved some of my money (federal, but not Quebec yet), and I've sued the Notary for interests and damage. Its insurer are offering a settlement.
I don't want to give too many public details at this point, but they argue the following point as defense:
[translating from French]
"The rules in this matter state that the buyer can be held responsible of a amount of 37.875% (25% federal, 12.875% provincial) of the [u]sale price[/u] if the sale was done without certificates by a non-resident. This burden is forced upon the buyer is independant from the fact that the seller has taxes to pay or not". [...] "Hence, in contrary to your pretention, an amount of XXXXX $ had to be kept notwithstanding the fact that the house was your principal residence and that no taxes were going to be pay. Furthermore, the rules are such that the amount must, in principle, be given to fiscal autorities and not simply kept in the fideicommis account of the notary. Following this sale, if the seller has no taxes to pay, he will be able to get a refund at his tax returns".
I sent letters and fixed forms to both CRA and Revenu Quebec to get my taxes back earlier. I was able to do it succesfully at CRA, they sent me checks back of the total amount of taxes I paid. At Revenu Quebec, on the phone, one person told me I was right and I was going to get a refund, another then after said the first person was incorrect and I had to wait until tax return as "it is the process".
What do you guys think about all of this ?
I could sue Revenu Quebec as a learning exercise, but I would rather spend my time elsewhere.
I don't want to give too many public details at this point, but they argue the following point as defense:
[translating from French]
"The rules in this matter state that the buyer can be held responsible of a amount of 37.875% (25% federal, 12.875% provincial) of the [u]sale price[/u] if the sale was done without certificates by a non-resident. This burden is forced upon the buyer is independant from the fact that the seller has taxes to pay or not". [...] "Hence, in contrary to your pretention, an amount of XXXXX $ had to be kept notwithstanding the fact that the house was your principal residence and that no taxes were going to be pay. Furthermore, the rules are such that the amount must, in principle, be given to fiscal autorities and not simply kept in the fideicommis account of the notary. Following this sale, if the seller has no taxes to pay, he will be able to get a refund at his tax returns".
I sent letters and fixed forms to both CRA and Revenu Quebec to get my taxes back earlier. I was able to do it succesfully at CRA, they sent me checks back of the total amount of taxes I paid. At Revenu Quebec, on the phone, one person told me I was right and I was going to get a refund, another then after said the first person was incorrect and I had to wait until tax return as "it is the process".
What do you guys think about all of this ?
I could sue Revenu Quebec as a learning exercise, but I would rather spend my time elsewhere.
Technically you still have to file a tax return for 2015 to show this is your principle residence and claim the exemption, were almost at the end of Nov 2015 and you could thereticvally file the return in Jan 2016 for 2015 and claim back the taxes from Rev Québec so save your money and simply file the 2015 tax return as early as Jan 2016 and simply claim back all the tax
JG