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Hello,
I left Canada in 2014 as a traveller planning to come back but in 2015 I decided to stay abroad and started filing taxes in 2015 as non resident. I started renting property then.
When I left I did not appraise the property. When I sell it in the future I am afraid the CRA will calculate capital gain from the purchase price in 2012.
What should I do now to plan for future sell?
Do I need to appraise the property now? Can it be a report from my realtor or does CRA accept only certified appraiser’s report?
Should it be done now or later when selling, say in 5 years?
Please let me know
Hi Rim,
This is a very common situation, and you are right to think about it before selling rather than after.
1. How CRA determines the capital gain
When you became a non-resident and began renting the property, there was a deemed disposition at the property’s fair market value (FMV) on the date you became a non-resident (or when the property changed to income-producing use, depending on the facts).
From that point forward:
- That FMV becomes your new adjusted cost base (ACB) for Canadian tax purposes.
- CRA should not calculate the capital gain from your original 2012 purchase price, provided the FMV at departure can be supported.
2. Should you get an appraisal?
Yes. It is strongly recommended to establish and document the FMV at the time you left Canada / became non-resident.
Although you cannot go back in time, you can still obtain a retrospective (historical) valuation based on market data from that period.
3. What kind of valuation does CRA accept?
- Best option: A report from a certified professional appraiser (AACI, AIC, or equivalent). This carries the most weight with CRA.
- Realtor opinions: A realtor’s letter or CMA can be used as supporting evidence, but on its own it is weaker and more likely to be challenged, especially if the gain is significant.
4. When should this be done?
It should be done now, not at the time of sale.
Reasons:
- Historical sales data is still available today.
- Waiting several more years increases audit and valuation risk.
- Having the valuation ready simplifies the future Section 116 clearance certificate and capital gains reporting.
5. Practical recommendation
- Obtain a retrospective appraisal as of the date you became a non-resident (or the rental conversion date, if different).
- Keep the report with your tax records.
- When you eventually sell, the capital gain will be calculated from that FMV forward, not from 2012.
If you would like assistance determining the correct valuation date or planning for a future non-resident sale, our office can help.