Posted on: 03-08-16 18:20:06
Quote:
Originally posted by shriya
Hi CD's
My parents in India own a residential property there which they want to give me as Inheritance. I am a citizen here and live in Ontario. After I inherit, I plan to sell this and transfer money to Canada. My relatives both in India and Canada are interested in buying this property. I would like to know what could be the tax implications here when money is wired to Canada and in India if any. I read somewhere inheritance money is not taxed here. But even if so what legal documentation would I require to prove that this money which I get is in fact inherited. Would I need the help of a lawyer here to do this?
Thank you
Quote:
Originally posted by Many
My father's Will gives me 1/4 share of his flat in Maharashtra; the other sibling is paying me equivalent money/indian Rs 15 lakhs, after I sign NOC in his favour.
Question:
1)Can I deposit the cheque in my NRO a/c without any questions being asked?
2) If I give 10-12 lakhs/Rs from my NRO a/c to my NRI daughter-in-law to buy a car, will it be taxed?
Hi Shriya,
After reading the detailed reply given by Full House and links provided by another poster, I believe the simplest way would be to let your parents sell the property in India to whoever, deal with whatever taxes or capital gains and then send you the remaining money as a Gift through proper banking channels. That way you DO NOT have to worry about how the money would come here and you do not have to pay any taxes as well.
Similarly, Many's parent can also sell the 1/4th share to his/her other sibling after he/she provides a NO Objection Affidavit and then remit the money to Many as a gift.
Please do confirm this with your accountant / lawyer here and in India as well before taking any action.
-----------------------------------------------------------------
Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Thank you FH.
Just wondering if I can freely use that money in NRO a/c (debit card, cash withdrawal) while I am in India, without any taxes or other issues.
-----------------------------------------------------------------
Many
All these years any interest earned on deposits in the Indian Banks were not taxed there in India. But what has happened in the last year is, The US IRS demanding that they permit the US Government to peek into these accounts that generate any interest income in India for the US Citizens and the holder, if he is a US Citizen, has to add this interest amount to his worldwide income and pay Taxes on it.
So, based upon this fact, if a Indian Depositor makes interest income and has to pay taxes on it, they said HEY why not we tax it first and let them claim that they already paid the tax here in India?? That was a slick move and the Banks and other Financial Institutions there in India started to with hold a portion as tax right there in India. Now they do not have to pay any taxes to Uncle SAM. But they just add it to their income and also add the monies paid to the Indian Government as taxes paid there in the USA. The US Government gets to know that there is some money belonging to a US Citizen there in India. But no taxes get paid on it.
So, in this cross fire we also got slaughtered. So, who has to report it, has become an enigma. For U.S.Citizens they report and get away. For the others, WHO CARES, They already took the taxes there in India anyway. So, they do not report this as income nor report the taxes deducted there. So, they keep MUM about it. It has become a pain in the butt for the citizens who invest there in India.
Is Canadian Government strict about it too. YES. We also have to report if you make any interest income there and add it to the income. Also if they with hold any taxes there out of it, then say you paid the taxes on the interest income in your tax return. It is just that they are making you work for your money.
Also the Interest reporting is from the date of deposit and 365 + 1 Day. Our year is from Jan 1st to December 31st. They want you to prorate it to get an approximate figure for the year ending by prorating the interest. Boy -o-boy they can surely make you work for it TWICE as much.
They were doing the same here in Canada with the Canadian Banks too. The Banks here got smart and said that we are NOW going to pay YOU only 0.25% and when you work all of this up, they had to give you a T5 Slip for that income. So they cut it off and now CRA does not bother any one any more. Because the amount you make is so small, it is not worth making a T5 Slip. It has become an Honour system. The CRA want you to be honest and report it. DO TELL ME If you ever heard anyone ever reporting their two bits interest in their income tax filing?
I am waiting, I am waiting!!
When you file the income tax return, if the amount you owe is less than two bucks, they say FORGET IT. You do not have to pay. In the same token, if they have to pay you, it has to be more than TWO Bucks. Otherwise FORGET IT too.
So, coming to the Indian Interest income... Mnnn, what did I just tell you?... I forgot..!!
My mind is getting blurred and my memory is GONE.
FH.
P.S. This income tax on income was started after the war to pay for the money spent for the WAR. It was only going to be a temporary affair and once they pay off the WAR DEBTS, it was going to STOP.
Isn't there a war going on some place? May be we are still paying for somebody's war expenses, but now they call it PEACEKEEPING. The tax system is now RAKING MONEY IN or it LARGASSE? fh.
very informative stuff; thanks FH
-----------------------------------------------------------------
Many
Your Parents can sell this property now or any time OR you can do the same after the inheritance to any one, prefrably at arms length people. This is to avoid any complicity later. If you take possession of the property and use it, then you will lose the INDEXATION component, which the property has, because your Parents might have held it for a very long period, but your date of inheritance becomes the date of reckoning for your acquisition. So, sell it immediately after inheritance.
FH.
Not sure. Indexation benefits may be available as the date of acquisition used may be the date the parents bought it.
Here are some factors to consider and they will play a vital role in determining the tax factors.
N.R.I., Canadian Citizenship.
Inheritance and the Registration of a Fixed Property and the same through in the form of a "WILL".
8-10% Stamp Paper costs if you wish to take over and keep it. (Please check this one too.)
Avoid all of the expenses by requesting your Parents to sell it and transfer the funds to you.
CANNOT transfer a Property unless you are present there at the Registrar of Properties Location. The laws are getting stricter. (So, Please find this one out too from your Parents) Otherwise you might have to go the Indian High Commission and sign a POA for it. It is time consuming and also a pain in the butt.
This is a very nice situation to be in when you are inheriting a large sum. It is a happy situation. Enjoy it. You don't need any aggravations and hence the suggestion that your Parents do the selling etc.,
Hope this helps.
FH.
Where would the parents live for the rest of their lifetime if they sell? Renting is still a stigma for their generation.
Stamp duty rates are 0 now i hear
