# Selling property and India and buying in Canada - Tax related in Canada



## can_in (Sep 19, 2015)

Hello everyone,

I am a PR in Canada. I have one property in India. I want to sell that property and use the money to buy a house here (in Canada).I have few queries:

Based on my research, I calculated the capital gain tax based on indexation. I used following formulae to calculate:

A) Indexed purchase price = Purchase Price X {CII for the year of sale (2008) / CII of the year of purchase (2015)}
B) Capital gain = Sale price – Index Purchase price
C) Tax with Indexation = Capital gain x 20%

My findings are as follows:

Value of B is coming out negative as the house value has dropped and been sold dirt cheap. I have ended up in capital loss instead of gain. I haven`t added property maintenance, upgrades etc. on this; this will further take the value to downwards i.e. negative.

Question: 

1. Do I still need to pay any tax on the sale in India as per indexation, as per my calculation it's going on negative side?
2. If I use same money in buying house in Canada, do I have to pay capital gain tax in Canada? Since, its on minus side in India.
3. Can I get the sale amount directly in my Canadian bank account from the buyer in India?
4. Any other suggestions are welcome 

Thanks in advance!


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## Spudd (Oct 11, 2011)

Was that place your primary residence at any time during that time? 

I am not sure what CII stands for. Are you looking at inflation numbers? I don't think you can adjust it by inflation - I think the capital gain is simply the price you sold it for, minus the price you paid for it. 

Also I don't understand step C. Where are you getting 20%? The capital gain is the difference between the price you sold it for and the price you paid. Oh, but since it's in India, you will need the exchange rate from 2008 and the exchange rate from 2015 because what matters is your capital gain in CAD, not in INR. 

So here's what I'd do:

Price paid (A) = price paid in INR * exchange rate in 2008
Price sold for (B) = price sold for in INR * current exchange rate
Capital gain = B - A

If the house in India was your permanent residence during any part of this time you might be able to exclude that time from the calculation. 

Tax on capital gains is on 50% of the amount of the gain at your marginal tax rate, whatever that is.


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## gibor365 (Apr 1, 2011)

I don't know how you got PR status, but if you are independent immigrant and fly into Canada, you declare at immigration office that you have property (or money) in other country, what is approximate value (better to have official appraiser papers) , so when you sell it, you don't have declare nothing and pay any taxes


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## steve41 (Apr 18, 2009)

Selling property AND India? If you threw in China, maybe you could afford a modest condo in East Vancouver.each:


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## HaroldCrump (Jun 10, 2009)

steve41 said:


> Selling property AND India? If you threw in China, maybe you could afford a modest condo in East Vancouver.each:


I believe he meant to say *in* India, not *and*


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## HaroldCrump (Jun 10, 2009)

*@can_in*:
To clarify a few things first - are you asking for help with calculating capital gains to be payable to Canada or payable to India?
If the latter, I can't help you and most likely no one here can (beyond doing Google searches, which you can do just as well).

Regarding Canadian capital gain taxes, note the following:

- The purchase price does not matter. What matters is the value of the property on the day you became PR.
Ideally, you should have some sort of documented proof of property value as of that date, such as bank/mortgage statement, appraisal, etc.
That value is the basis for calculating capital gain, not the original purchase price in India (which could have been years/decades ago)

- *Look up the CAD/INR currency cross rate as of the date you became Canadian PR* (i.e. "landed"). This will be used as the basis for calculation.

- Any improvements made to the property, or any maintenance expense since the day you became PR are deductible expenses (again, you need to convert currency for each expense as of the date of the expense)

- Convert the sale price to CAD as well

- Capital gains taxes are not 20% in Canada.
50% of the gain is to be *reported as income on your tax return*.
The tax accruing on the property will be part of your overall tax liability.

If it is a loss, you can only write off that loss against other gains.
You cannot use capital losses to offset regular earned income.
In this case, *simply carry forward the loss*.


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