Do I report an Indian flat I only use on holiday?
Property held for your own personal use sits outside the Canadian foreign property reporting form. The test is what the property is held for, not where it is or what it cost. A flat kept for the family's visits, not let and not held as an investment, is normally outside it. Change the use and the answer changes with it. Let the same flat for a season and it becomes property held to earn income, and it comes into the reporting from that point onward. The US account reporting is not concerned with real property at all, in either case, so the flat itself never appears there.
Is my Indian bank account reported on FBAR or T1135?
Potentially both, because they are different questions asked by different countries about the same thing. The US filing is about foreign financial accounts, and is driven by the aggregate of the balances you hold or can sign for. The Canadian form is about specified foreign property, which includes funds held abroad, and is driven by the cost of what you hold. A person filing in both systems reports the same account twice, on two unrelated tests, in two currencies, for periods that do not match. It is the same underlying information, and it should be assembled once and then cut two ways.
Do I report an account I only sign on for my parents?
For the US filing, signature authority is enough on its own. You can have no beneficial interest in a rupee of it and still have a reporting obligation, because you are able to operate the account. This catches a great many people who were added to an elderly parent's account for practical reasons and never thought of it as theirs. The Canadian form asks a different question and looks to what you own rather than to what you can sign for, so the same account can be reportable in one system and not in the other. Check the mandate the bank actually holds.
Does renting out my Indian flat change what I report?
Yes, on the Canadian side. The property moves from personal use to property held to earn income, which brings it into the foreign property reporting, and that reporting is by cost rather than by market value. It also brings the rent itself into your home return for the year it arose, which is a separate obligation and is not satisfied by the property disclosure. The account the rent is paid into may already have been reportable in its own right. The change of use is the event worth diarising, because it is the one nobody thinks to mention to their accountant.
Do I still report Indian property if it earns nothing?
Property held to earn income is reportable whether or not it actually earned any. A flat bought as an investment and sitting empty between tenants has not changed its character, and an unlet year is not an exemption. The reporting is a disclosure of what you hold, not a statement of what it made. This trips people up in the year of purchase, when the property is often held for months before anything comes in, and again in the year of sale, when it is held for part of the year and is then gone. Both of those years are reportable.
What if I have not reported my Indian assets for years?
The first step is to establish what actually should have been reported, which is usually less than people fear and occasionally more. Personal use property may have been outside the Canadian form all along, while an account somebody else operates may have been inside the US one. Once the real position is known, there are established routes for bringing past years forward, and they are materially better than waiting to be asked. Coming forward voluntarily and coming forward after contact are treated very differently in both systems. Assemble the account histories first, then decide the route.
I have not filed for several years while living abroad — what are my options?
Both countries have routes back, and using one before they contact you is what preserves the relief. On the US side there are procedures aimed at taxpayers whose failure was not wilful, including one designed for people living outside the country, and separate procedures for late account reports and information returns alone. Canada has its voluntary disclosures programme and taxpayer relief for penalties and interest. Filing quietly and hoping is the one approach with no protection attached to it. See catch-up filing.
Is the sale of foreign property taxable where I live?
For a resident, yes — worldwide gains are taxable, and the gain is computed in your own currency, so the exchange rate at purchase and at sale changes the number even when the local-currency price did not move. The country where the property sits usually taxes it too, often with a withholding or clearance step before closing, and that tax becomes a credit. A principal residence relief may apply to a home abroad on the same terms as one at home. See principal residence and foreign property.
