Form T1135 Foreign Income Verification Statement must be filed when a Canadian taxpayer answers ‘yes’ to the question “Did you at any time in the year own specified foreign property valued at over $100,000 (CAD)?”
Watch: Foreign Property and the T1135
However, some real estate is considered exempt from this question, and therefore doesn’t trigger — and need not be reported on — form T1135.
The key is the word ‘specified’ in ‘specified foreign property.’ Not all foreign property fits CRA’s definition, and if the property isn’t specified foreign property it doesn’t count towards the $100,000 threshold, and doesn’t have to be reported on T1135 (whether you’re obliged to file or not).
In determining whether a particular piece of real estate is ‘specified foreign property’ or not, CRA seems to be interested in establishing what the primary reason for holding the property is: is it an investment property that is held primarily for the purpose of earning profit? Or is it a personal property owned for personal use (which may or may not be occasionally rented out to help with costs)?
The simple fact of renting out the property is not enough to make the distinction, so this determination can be tricky. Even CRA provides examples rather than rules in this situation. Refer to their own information (below) to determine if your property is ‘Specified Foreign Property ‘ (i.e. reportable) or not (i.e. exempt).
The blue text below is taken directly from the Canada Revenue Agency (CRA) website. If a given piece of foreign real estate isn’t considered specified foreign property with respect to this guidance, you can omit it from your calculations of the CA$100,000 foreign property threshold. And regardless of whether or not you file the T1135 (e.g., if you reach the threshold due to your other foreign property) you don’t need to report it there.
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CRA on Real Estate and Specified Foreign Property
38. If an individual owns a condominium in Florida that has a cost amount of $120,000, is the property specified foreign property for the purposes of Form T1135 if the condominium is:
- used exclusively by the taxpayer as a vacation property?
- rented out for eight months of the year with a reasonable expectation of profit and kept for personal use the other four months?
- rented out for part of the year without a reasonable expectation of profit for the purpose of recovering a portion of condominium expenses?
Specified foreign property does not include personal-use property. Personal-use property is generally defined as property owned by the taxpayer that he or she or a related party uses primarily for personal and enjoyment purposes. The CRA takes the view that “primarily” means more than 50%. Whether a particular property is primarily for personal use and enjoyment is a question of fact that is determined on a case-by-case basis.
In situation (a), the individual does not need to report the condominium since it is held primarily for personal use and enjoyment.
In situation (b), the property is not held primarily for personal use and enjoyment. As a result, it is a specified foreign property and has to be reported on Form T1135.
In situation (c), if there is no reasonable expectation of profit and the individual is merely recovering part of the condominium expenses, the CRA will consider it a personal-use property. As such, the property is not a specified foreign property and is excluded from the reporting requirements of Form T1135.
39. A taxpayer owns a four-unit property located outside of Canada. One unit is personal-use property of the taxpayer and the other three units are rented out with a reasonable expectation of profit. What are the Form T1135 reporting requirements? Assume the taxpayer owns other specified foreign property with a total cost amount in excess of the $100,000 reporting threshold.
If all of the units have roughly the same size and value, the property would be a specified foreign property and the taxpayer would have to report the entire cost amount of the property on Form T1135. Since 75% of the property is rented out for profit, it is not considered to be personal-use property.
40. If a Canadian corporation has a warehouse in England with a cost amount of $900,000 used to store business inventory, is the warehouse a specified foreign property?
A property that is used or held exclusively in the course of carrying on an active business is excluded from the definition of specified foreign property. If the warehouse is used only for storing inventory used in the corporation’s business, it does not have to be reported on Form T1135.
41. If a taxpayer acquires a specified foreign property for $500,000 with a down payment of $50,000 and the balance financed through a mortgage, does the taxpayer have to file Form T1135 if the property is his or her only foreign property?
Yes, the taxpayer still has to file Form T1135. Although the down payment is $50,000, the cost amount of the property, being $500,000, exceeds the $100,000 reporting threshold.
42. If a taxpayer enters into a purchase contract to buy a $500,000 specified foreign property that will be built and completed in two years, but has made a down payment of $50,000, does the taxpayer have to report it if it is his or her only foreign property?
The purchase contract should be reviewed to determine when the taxpayer acquires the property. If the title of the property has not passed to the taxpayer, the taxpayer does not have to report this foreign property.
Read more about: Foreign Property Worth Over $100,000 CAD
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If an individual owns a condominium in Portugal that has a cost amount of $220,000 CDN, is the property a specified foreign property for the purposes of Form T1135? The condominium is used exclusively by the taxpayer as a vacation property
Refer to the CRA guidance I linked in the article. But in general, if the condo is solely personal-use, it does not have to be reported on T1135.
Purchased condo 2010 in Florida. Used strictly for personal use 5 to 6 months per year (except recent covid period. Never rented or earned any other income. We are now in our late 70’s and could no longer travel. And sold in 2022 109k capital gain. the US return has been filed.
We were told in 2010 that we did not need to declare the property and have never done so?
Because it was for personal use, the property did not have to be reported on T1135 Foreign Income Verification Statement, no. But if you’re still a resident of Canada, the capital gain on the property does have to be reported on your Canadian tax. You’ll simultaneously file a foreign tax credit (FTC) claim to get credit for any US tax you paid on the sale. This should minimize the actual capital gains tax you pay on the Canadian side. If you’d like our assistance with filing the return declaring the sale and making the foreign tax claim, please contact us directly and we’ll be happy to assist.
I bought a condo apartment in India worth 57k CAD where my parents live for free of cost. I pay the mortgage and I don’t collect any rent from my parents. Do I need to report that on my T1135 form? I do file that form every year using Detailed reporting method thanks to my huge savings bank balance in the US.
Refer to CRA’s wording above; but in general, no. The property is clearly not held as a vehicle for earning profit from rent, so it’s not a specified foreign property.
Inherited (half) a property in UK. Property still in the Probate procedure. Probate has not been granted yet. Property currently unoccupied. Property used once/twice a year for family visits from overseas. No revenue generated from property. Should this property still be reported on T1135?. Thank You!
At this moment certainly not, since the property doesn’t belong to you yet. It’s in probate, so it currently is owned by the estate of the person who passed away. An estate is a form of trust, which has to file its own tax returns including its own T1135 if applicable.
As for when you have actually inherited the property, if you keep it for personal use then it doesn’t have to be declared. But if you hold it as an investment with the hopes of renting it at a profit, it may become specified foreign property and need to be declared.
Remember, too, to keep things in perspective. If the property isn’t earning revenue, there’s no tax liability even if you (or the estate) do have to declare it on T1135.
Someone moves to Canada and becomes a permanent resident. They have non personal use property at home. Do they use the actual cost that they paid years ago or the value at the time they arrive in Canada?
In this case it would most likely be the fair market value of the property as of the date you became a tax resident of Canada. NOTE: this is NOT the same as becoming a Permanent Resident. The term ‘Permanent Resident’ is used by our immigration/citizenship system, but has no meaning to our tax system. You become a tax resident of Canada when you begin to factually (i.e. physically, in general) reside in Canada.
For the deferred annuity, how to calculate and indicate the maximum cost amount in T1135?!May use the cash value provided from the financial institution?! Thanks
If you paid a lump sum for the annuity, the lump sum is the figure that must be reported here. If you make individual payments, you may need to report the total payments to date instead.
If a taxpayer owns property in India jointly with his father resident in India with no income associated with the property. Investment in the property is made fully by his father. The taxpayer was made joint owner to avoid any inheritance issue in future. Does it require disclosure in T1135.
If the property is for investment and not for personal use, and the purchase price of your interest in the property exceeds $100,000, you must file T1135. But be aware of two things: 1) the T1135 does not trigger any tax, so you don’t have to be afraid of filing it; and 2) inheriting property is not a taxable event in Canada.
Very interresting,
I bought one condo in the dominican republic 90000usd, personal use only. Now im selling it at 150000usd with all the extras, elecrto ,tv etc. From what i understand i’ll have to pay taxes on 50% of my profit when selling. Great article btw thanks
That is correct. The Dominican Republic may also impose a tax on the sale, since the asset is in their territory. If so, you should apply for a foreign tax credit on your Canadian return to reduce your Canadian tax.
Thanks for an excellent, clear article on this (very confusing, to me!) subject.. I hope I doesn’t confuse the CRA when I don’t click the “over $100,000” box, after I did last year!
Hi, I have read all the Canadian government material on personal use property, and additional material on real estate and vacant land. My question is if one holds land (a vacant lot) in Europe with the intent to build a cottage strictly for personal use, is it included or excluded in the math for the total that triggers the report requirement of the Foreign income verification?
Additionally, if the land cost 250,000 CAD and is co-owned between husband and wife. Would each claim half…ie 125,000 CAD.
Many thanks.
Hi Mark, this is an interesting question and would require a little further information from you and research on our part to see how the law might apply to your specific situation. If you’re interested in booking a paid consultation, please contact us to discuss options.
We bought a condo property in USA for personal use only in 2002, our family vacationed in the property for more or less of a few weeks every year since then except for 2021 and 2022 due to the covid travel restrictions. In 2024 we had just sold the condo.
On the other hand, we have bought and sold our Canadian principal residences twice between 2001 and 2017, and have lived in the current property in Canada since we bought it in 2017.
My understanding is that, for tax purpose, we may designate the American property as the family principal residence for the years between 2018 and 2024, but will have to pay capital gain tax on the property value increase between 2002 and 2017 as the principal residence designation was used on our former Canadian residences during this period, am I correct? If so, what qualifies as the American property value assessment for what it’s worth in 2017 (or should be an assessment done for 2018 instead)? Thank you!
CRA has information regarding principal residences outside Canada here. You need to keep two things in mind. The first is that in any given year, only one property can be designated as your principal residence (except in years where you sell property #1 and purchase property #2 — both can be your principal residence in the year of purchase/sale). The second is that when a property is your principal residence for only some of the years in which you owned it you just use a straight percentage to calculate how much of the gain is taxable. You can see an example of this kind of calculation here — just replace [years in which it was a rental] with [years in which it was NOT your principal residence]. The math is the same.
I bought a condo in Florida and set up a US corporation that owns it. My wife and I are its only shareholders. The condo is for our personal use and is never rented out. Do we need to report it to CRA using form T1135?
It’s interesting that you chose to incorporate to hold a personal-use property. Having done that, however, you may be obliged to file a disclosure regardless of the use of the home. Remember that at this point you don’t own a condo — another entity, the corporation, owns it now. What you own, is a 50% stake in a foreign corporation, which is itself something that needs to be reported.
You’ll notice that the current tax filing includes a question about ‘foreign affiliates,’ i.e., foreign corporations. If you own more than 10% of a foreign entity (and presumably you and your spouse own 50% each), you need to report that on a T1134 Information Return Relating To Controlled and Non-Controlled Foreign Affiliates. It’s actually more complicated than a T1135, but it’s your legal requirement to file it. The deadline is 10 months from the end of the year, so you have a little extra time to pull it together. If you need help with that, please drop us a line.
Hi, I have an apartment in Italy and my parents live in there. They give me 400Euros a month to help me out to pay the mortgage. Do I need to report it to CRA using form T1135? Or this is considered a personal use?
Also, If I use the apartment to go on holidays for 30 days a year, Is this time enough to be considered as a personal use?
Thanks!
This would most likely be considered personal use, and thus not reportable on the T1135 Foreign Income Verification Statement. This is because it’s apparent both by the fact that you rent it out to your parents, and by the small amount they pay you in rent, that you’re not renting it out with the intention of profiting on it. (This is especially true if the amount of rent you’re receiving isn’t enough to actually be profitable to you).
If I owe a property in SG and my parent is residing and not generating income. I read somewhere I do not have to report if it’s personal property but now having conflicting answer. Also, I purchase a home in Canada in 2019. I become PR in 2017.
If your parents are living there and not paying you rent (or if they’re paying you some rent, but it’s not intended to generate a profit for you), the property is most likely considered personal use property and is therefore exempt from being reported on the T1135 Foreign Income Verification Statement.
I have a condo in India, which was bought almost 30-40 years ago, at a very low cost base. The condo has been solely for personal use and I am considering selling it now. For the purpose of reporting on Income tax in Canada, will the cost base be the original purchase price OR the fair market value with CPI adjustments and applicable date be when purchased, or when moved to Canada ? Also, since it is required to pay capital gains tax in India, for such sale of property, is it possible to claim a credit towards Capital gains tax payable in Canada ?
Thank You
The cost base would be the fair market value (FMV) as of when you became a tax resident of Canada. If you pay capital gains in India, you can apply for a foreign tax credit (FTC), but only on the portion of tax that applies to the portion of capital gain that you’re declaring in Canada. We can set up a consultation to discuss this in more detail, if you like.
I owe 30% of a Grand Caymans townhome that just closed in November 2025 , it is over the $250,000 Canadian (due to the conversion) . When filling out the form what can I include in the cost base ( Legal Fees, furniture etc) . We will be renting it in 2026 but want to insure I provide the right information as I will need to convert it from CI (Cayman currency to Canadian) . I have also paid some expenses in 2025 but since it was not rented I am assuming I can not claim
Unfortunately we can’t offer tax advice at this level of detail on a blog. For in-depth help with this issue, you can book a consultation by contacting us here.