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Legal Ease
Legal Ease, Lawyer
Category: Canada Tax
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Experience:  I have been a lawyer since 1985 and have been a professional on this site for 12 years.
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Can you please explain the tax the CRA takes from a house

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Can you please explain the tax the CRA takes from a house sale if you’re selling a house in Canada out of country?

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Was this your principal residence when living in Canada?

Are you a resident of Canada?

Customer: replied 11 months ago.
My mom and dad sold the property. It was our only property and we had lived there for 16 years. Sold for $280,000 or there abouts. I know that the government has held back a lot of money because my mom was currently living in the UK at the time of sale so they viewed her as a non resident.
Customer: replied 11 months ago.
I am going to assume it was the CRA. So I was curious what the CRA is and why it could take so much money?

I need to figure out a bit more in terms of the timing. When did your mother move to the UK?

Where was your father living at the time of the sale of the home?

Customer: replied 11 months ago.
My mother moved about 2 weeks before.
Customer: replied 11 months ago.
She was there when the potential buyer (buyer) came to first view the house. My sister, dad and myself were still living in the house.

That doesn't make any sense then. The CRA is the Canada revenue agency and given that this was the principal residence of your parents who are the owners and your mother moved just two weeks before the house was sold it makes absolutely no sense for there to have been a hold back by the buyer of the house.

Your mother should be able to get a full refund of the hold back because at the very most she would have to include 1/4 of the capital gains incurred over the two weeks in her income for tax purposes. So it would be notional or essentially nothing. Your mother may need to retain an accountant instead of filing her own taxes this year.

Does that help?

Customer: replied 11 months ago.
Well my mom tried sorting it out by emailing my uncles lawyer. Not quite sure she got anywhere with it because my brother (oldest, smart) was the one who was probably telling my mom what to send in the emails based off what was sent to her. My mom is very insistent that she should get her money back but hasn’t actually got around to it. My brother is saying that the government has withheld money and will only give it back if we were to move back and once again become permanent residents.

Brother is 100% incorrect. That is nonsensical. She gets it back as soon as she files her tax return.

Customer: replied 11 months ago.
I’m convinced they have messed up along the way, which would make sense cause my mom works night shifts at the hospital and probBly tried communicating while she was operating on no sleep.

Your brother is 100% incorrect. That is nonsensical. She gets it back as soon as she files her tax return.

Customer: replied 11 months ago.
Right, I’ve quizzed her on it. We sold the house for $280,000
Customer: replied 11 months ago.
The government or tax agency kept $70,000 from each.
Customer: replied 11 months ago.
25% slapped on each of m parents.
Customer: replied 11 months ago.
My mother has since gotten hers back - my dad however is deceased. How would we go about trying to recover those funds?

That is bizarre about your father as he had not moved.

I am sorry for your loss.

Your father's executor files the return and will get the refund just as your mother did.

Customer: replied 11 months ago.
Define executor
Customer: replied 11 months ago.
My dad didn't have a will, so no one has been named to handle his affairs. Can my mother just do it? or me, or my brother..?

One of you has to apply to administer his estate but you have to be living in Canada to do that.

Customer: replied 11 months ago.
My mother has power of attorney. She wouldn't be able to do anything from here?

The power of attorney is void because your dad died. Someone has to retain an estate lawyer and apply to administer your dad's estate.

Customer: replied 11 months ago.
Well, I'm going to put this on pause until tomorrow because it's 2:15am right now. But when I get up in the morning, I am going to look into the emails that were sent and received. My mom is saying one thing, my brother is saying another. The only thing they have said in unison is that $70,000 is missing.


Customer: replied 11 months ago.
Okay, I've read through the emails. It is clear that my brother was sending these emails based on how they were written. Obviously, he's probably told my mother exactly what happened in these but my mother probably being tired at the time either forgot or interpreted it as 'the government owes me money'. Basically, from the quick read I had, the government released the payments from the house. Not sure how it was calculated - but it was $70,000. They kept $24,250 from my mother and father. This is because they filed on the taxes that they sold it while they weren't in the country, which wasn't true. The other $21,500 that the lawyers kept was released fairly quickly. So these emails confirmed that both my mothers and fathers money has been released to her. The only money that they kept, which my brother was referring to, was from a different sale of land.
Customer: replied 11 months ago.
This was the tax for the Capital Gains Tax from what I could decipher. It is of the value of $37,000 and the accountant said that we would be able to file it and get our money back if were to move back into Canada and if my mother was to pick up a taxable income again. This is where the we get our money back if we move back came from.
Customer: replied 11 months ago.
Now there wasn't really much explaining to do, my brother and mother were just entrusting the accountant to do it for them. But, and I'm not sure how much this land was sold for. When taxed for Capital Gains, why would they let us get the money back if we were to move back?
Customer: replied 11 months ago.
As opposed to letting my mother get it back from living in the UK.

If your mother didn't owe the money the government will give it back. So if it was from the principal residence she gets it back. If it's not from the principal residence she doesn't get it back but later on if she has a capital loss she could use a capital gain to write off the capital loss possibly.

Clearly your mother needs to retain an experienced accountant in Canada to review all of what has gone on and to rectify any errors.

Customer: replied 11 months ago.
okay, thank you.

You are very welcome.

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