Client Background: Our client, a UK-based individual, owned a residential property in Canada. The property was purchased in 2011, and the client resided there until 2020. During this period, the property served as their primary residence. In 2020, the client relocated back to the UK, and the property was subsequently rented out until 2024. Over these years, the property’s value appreciated significantly, approximately tripling in value.
The Challenge: In 2024, the client decided to sell the property. Upon consulting with their previous accountant, they were informed that the capital gains tax liability would be around CAD 200,000. This substantial tax burden was a significant concern for the client, prompting them to seek a second opinion.
Our Approach: The client approached Winsme Consulting for a comprehensive review and potential solutions. Our team began by gathering detailed information about the property, including its purchase price, the period of ownership, and the rental income generated from 2020 to 2024. We also reviewed the client’s residency status and any relevant tax treaties between the UK and Canada.
Detailed Analysis:
- Property Details: We examined the property’s purchase and sale prices, as well as any capital improvements made during the ownership period.
- Ownership Timeline: We analyzed the timeline of ownership, distinguishing between the period when the property was the client’s primary residence and the period it was rented out.
- Tax Exemptions: We identified applicable exemptions, such as the principal residence exemption, which can significantly reduce the taxable capital gain for the period the property was the client’s primary residence.
- Tax Treaties: We explored tax treaties between the UK and Canada to ensure the client was not subject to double taxation and to identify any additional reliefs available.
The Solution: Based on our detailed analysis, we advised the client on the following steps:
- Principal Residence Exemption: We applied the principal residence exemption for the period from 2011 to 2020, significantly reducing the taxable portion of the capital gain.
- Rental Period Calculation: For the rental period from 2020 to 2024, we calculated the capital gain proportionately, ensuring accurate reporting and compliance with Canadian tax laws.
- Tax Treaty Benefits: We leveraged the UK-Canada tax treaty to prevent double taxation and to apply any available credits or deductions.
The Outcome: Our strategic approach resulted in a dramatic reduction of the client’s capital gains tax liability from CAD 200,000 to just CAD 30,000. This outcome not only provided immediate financial relief but also demonstrated the importance of expert tax planning and advisory services.
Client Satisfaction: The client was extremely pleased with the outcome and expressed their gratitude for our thorough and effective approach. They were particularly impressed with our ability to identify and apply exemptions that their previous accountant had overlooked. As a result, they engaged Winsme Consulting to prepare an advisory report for their future investments, ensuring they continue to benefit from our expertise.
Conclusion: This case study underscores the value of detailed tax planning and the benefits of seeking professional advice. By thoroughly analyzing the client’s situation and applying the appropriate exemptions and tax treaty benefits, we were able to achieve substantial tax savings. This success story highlights Winsme Consulting’s commitment to delivering exceptional value and results for our clients.
Client Testimonial: “We were amazed by the savings Winsme Consulting achieved for us. Their expertise and attention to detail were exceptional. We look forward to working with them on our future investments.” –
Interested in how we can help you achieve similar results? Contact us today for a consultation and discover how Winsme Consulting can assist with your tax planning and investment strategies.
