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capital gains tax exemption on foreign property


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Hello gooper. You will first need to look for the tax treaty between Canada and the country where the property you sold was located. The situation can be quite complicated. In many cases the gain will be taxed in the country where the property is located and you will still report the gain on your Canadian return and then apply any foreign tax credits (none as you stated in your case). If the gain was exempt in the country of the property you will need to determine if that exemption would apply to the Canadian return. For instance if it was your principal residence and you owned no other residence in Canada or anywhere in the world then yes it could be exempt under the principal residence exemption in Canada. If it was a rental property and you claimed it on your Canadian taxes in the past then the principal residence exemption will likely not apply.

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