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Therefore, the new immigrants landed in Canada, looking for a job, the second to buy a house. The old immigrants are busy with promotions and pay increases, and the second are busy changing big houses and buying more houses. In Canada, whether you buy a house to live in or buy a house, you should be a wise man, or you may become the object of tax inspection by the Inland Revenue Bureau if you lose money in a muddle.
I. tax Planning for self-Housing in Canada.
Before we talk about this, let’s first define the four requirements of PrincipalResidence:
Must be a house (including detached houses, semi-detached houses, town houses, apartments, etc.).
Second, the house must be used for self-occupation.
Third, it must be owned by Canadians (including Canadian citizens and residents).
Fourth, there is a limit on the area. Generally speaking, the area occupied cannot exceed 0.5 hectares or 1.25 acres. How big is 1.25 acres? in square parcels, it’s about 233 feet by 233 feet or 71 meters by 71 meters. If the land area exceeds the limit, there must be sufficient reasons to show that a larger area of your main residence is necessary, otherwise the house will not be treated as self-housing.
If these four targets are met, the Canadian government will be tax-free for the value-added part of buying and selling your own house, that is to say, no matter how much money you make when you sell your house, it is your own, put it in your wallet and do not have to pay tax.
It should be reminded that in Canadian home ownership, the value added generated by the sale of the house is not taxed, but starting from the second home, the value added generated by the sale of the house must be taxed. Some people may say that the Canadian government has a regulation that there is a lag in selling a house for one year, so I sell my house once a year, and I can deal with it as my own house every time. Such a situation may take effect when dealing with the first one or two properties, but it will be the target of the Inland Revenue Department every year. There are many such cases, so we are advised not to follow suit. At the same time, for multiple properties in Canada, VAT will be paid, and the rental income will be included in the current year’s income, and the income will be filled in the T776 form when filing the tax return.
II. How to treat real estate in China as self-housing.
Unlike 20 years ago, after most immigrants arrive in Canada, in addition to buying homes in Canada, China also retains real estate. For the handling of Chinese real estate, we must first abide by the relevant legal provisions of Chinese real estate sales. When it comes to the change of identity, some people may wonder whether my property in China is self-housing, because I will go back to live for a while every year. For people who own only one apartment in China, the Canadian tax rate is set like this. The specific calculation formula is (buying house price-selling price) × (Number1) / N to calculate the final benefit, and then pay tax, where N refers to the year. For people who own more than one property, this standard is not suitable and it is necessary to actually pay VAT.
Tax concessions for buying a house in Canada.
The Canadian government has such a rule that if you buy a house in Canada, if you are also a global buyer, that is to say, you have never bought a house before.
The Ontario land transaction tax rebate can apply for a provincial tax rebate of $2000 for second-time home buyers around the world. The tax rebate of $2000 is probably based on the house price of $227500. If the house price exceeds $227500, the tax rebate is still $2000.
The Toronto land transaction tax rebate can apply for a provincial tax rebate of $3725 for second-time home buyers around the world. The tax rebate of $3275 is probably based on the house price of $350000. If the house price exceeds $350000, the tax rebate is still $3725. You can also enjoy a $5000 tax rebate from the federal government.
If you buy a house in Canada but not by global buyers, you can’t enjoy the preferential policies of Ontario and Toronto, but the federal government’s $5000 tax rebate still applies.
IV. Tax issues of non-tax residents in adding real estate.
Canada has no restrictions on the purchase of real estate by non-tax residents (whether companies or individuals). Foreign residents own Canadian real estate, so the income generated or earned from the sale of the house is subject to tax. Non-Canadian tax residents who sell any Canadian real estate in the current year must file a Canadian income tax in the same year.
The tax Law S.116 of the Inland Revenue Department stipulates that sellers with the status of ordinary foreign residents should first hand over 25% of the house price to the Inland Revenue Department. After the sellers have completed their tax returns for that year, the Inland Revenue Department has calculated that the taxes that sellers need to pay in Canada this year will be refunded and compensated less. If sellers want to avoid withholding 25% in the Inland Revenue Bureau, they need to pay tax to the Inland Revenue Bureau before the transfer of ownership of the property, and apply for a Certificate., but the process of obtaining Certificate is tedious, which generally takes at least half a year, and it is not realistic for most residential housing transactions to get Certificate deductions. So if homeowners live in China for a long time and do not file tax returns in Canada for many years, they are likely to get 75% of the house price immediately when they sell their Canadian properties, and they need to find an accountant in Canada to be responsible for the year-end tax return to calculate the actual amount to be taxed.
Rent income is required to be taxed before settlement. The taxation of non-tax residents in Canada is handled by the international taxation department of the Canadian Ministry of Revenue. Non-tax residents are required to pay tax first and make the settlement at the end of the year when filing the tax. This will ensure that Canadian tax will not be lost because it is very difficult and expensive to recover tax from non-tax residents. There are two ways for non-tax residents to pay taxes first. The tax is based on the total income (before deducting rental expenses), and the second is on the net (after deducting rental expenses).