Deemed Disposition of property by Emigrant of Canada

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adeboloj
Posts: 73
Joined: Fri Mar 24, 2017 10:50 am

Deemed Disposition of property by Emigrant of Canada

Post by adeboloj » Sat Apr 18, 2020 10:31 pm

As a resident of Canada who lived in a house for couple of years, then became a non resident of Canada.
The house changed from primary resident to investment/rental purpose.
Since the real estate in Canada is way down for sometime now (true for my departure year).
I am wondering if someone could guide me in the right direction if I should list this house as deemed disposed on T1243 as such there will be loss reported to CRA, or simply avoid listing it as deemed disposed since its still a rental property in Canada and only have the property listed on form T1161- List of properties by Emigrant of Canada.
I will like to know the best approach for my situation and if there might be a push back from CRA if i declare the rental as LOSS on deemed disposition The truth is that the base cost of the property at the time of purchase is down by 6% to the Fair Market Value (FMV) at the time of departure.

Thank you

nelsona
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Re: Deemed Disposition of property by Emigrant of Canada

Post by nelsona » Sun Apr 19, 2020 7:02 am

When did you leave Canada? You would first need a valuation for that date, not now.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

adeboloj
Posts: 73
Joined: Fri Mar 24, 2017 10:50 am

Re: Deemed Disposition of property by Emigrant of Canada

Post by adeboloj » Sun Apr 19, 2020 3:40 pm

Thank you Nelsona,
Unfortunately, I did not compete the evaluation at the time of departure- sometime in last year September!
But since i tried to sell the house, I have FMV conducted by real estate agents, also I have the city assessment? Not sure if all these is acceptable.
But I finally did the evaluation 6 months later when house mortgage was up for re-finance.
So question is can i use the real estate assessments or the city assessment for the value of the house at departure time?
If not, the only official evaluation proof i have is the one after departure when i re-finance the mortgage.
I am in the process of completing my departure tax and needed to be guided appropriately on what goes on the deemed disposition form- others I can think of are cars that were valued about 10k.

Thank you

adeboloj
Posts: 73
Joined: Fri Mar 24, 2017 10:50 am

Re: Deemed Disposition of property by Emigrant of Canada

Post by adeboloj » Sun Apr 26, 2020 8:19 pm

Nelsona,
Please is there any tax advise here?
As I mentioned, I didn't do any appraisal of the primary residence upon leaving Canada but happened much later when the house was refinanced.
Not having an evaluation at the exact departure month and also since its a property in Canada.
Do i really need to list it as deemed disposed? If i do based on the market assessment, its my primary residence up to departure so no capital gain more so properties has depreciated so low which works out either way.
I will appreciate your opinion here please, should i list the property as deemed disposed and include on the form the FMV or just leave it out as one is not necessary required to include Canadian immovable property on the deemed disposition form.

Thank you

nelsona
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Re: Deemed Disposition of property by Emigrant of Canada

Post by nelsona » Mon Apr 27, 2020 7:56 am

You need an FMV for your departure date.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

creaks41
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Re: Deemed Disposition of property by Emigrant of Canada

Post by creaks41 » Tue May 12, 2020 4:40 pm

I elected to do a deemed disposition on my principal home when I departed Canada a few years ago. This resulted in a new stepped-up cost base for the property. I turned the home into a rental property shortly after I left the country. To establish the FMV on my departure date, my real estate agent provided a formal FMV assessment letter using data from 3 comparable homes nearby that sold +/- a month of my departure date. Your agent should be able to go back and easily pull historical sold data since you weren't able to complete this before you departed. I did not use the city assessment for establishing FMV.

I recently sold my Canadian property at a loss, whereby my sale price was below my new stepped-up cost base (the deemed disposition amount at FMV). To complete the sale, I had to apply for a clearance certificate from the CRA. One of the requirements is to provide supporting documentation of your property's FMV upon departure date. You can use the real estate agent's formal FMV letter to meet this criteria.

Hope this helps!

nelsona
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Re: Deemed Disposition of property by Emigrant of Canada

Post by nelsona » Tue May 12, 2020 6:02 pm

Good info. Whether one elects to deem dispose or not it is ALWAYS advisable to get an FMV eval when leaving. You need it for US taxes and depreciation in any case.
The danger of deemed disposition of that property is if the value goes up after leaving. Then you may have trouble using the traditional (years Plus 1) method of determining taxable gains.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

adeboloj
Posts: 73
Joined: Fri Mar 24, 2017 10:50 am

Re: Deemed Disposition of property by Emigrant of Canada

Post by adeboloj » Sun May 17, 2020 11:57 pm

Thank you creaks41 for the clarification.
I decided not to deem disposed the principal property at departure as advised by an accountant- this can be taken care of when the property is sold.
Instead, i listed it as property by EMIGRANT of Canada. And file 216 return for the income from the property.
I gathered the FMV assessment from the real estate agent at some point after my post as I wasnt getting any help on this topic!
CRA deadline is June 1st so I needed to complete the departure tax soon as it has to be mailed to Canada.
When I sell the property in future, I will be using the real estate assessment as the FMV at departure to calculate capital loss or gain.
For now, I will just file 216 for the property until we are lucky to get the property sold.
Thank you once again.

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