How does CRA find out I own foreign property?

Several ways. (1) Common Reporting Standard (CRS): Canada participates in the OECD's automatic information exchange program. Foreign financial institutions (banks, notarios in some cases) report Canadian account holders to CRA automatically. (2) FINTRAC: Large wire transfers (>$10,000 CAD) trigger FINTRAC reporting; patterns of international transfers to the same destination can flag for review. (3) Foreign rental income on your return: If you report rental income from a foreign property on Schedule T776 but haven't filed T1135, that inconsistency may trigger review. (4) Tips and third-party information: Disgruntled ex-spouses, business partners, or others can tip CRA. (5) Random audit selection: T1135 compliance is a CRA audit priority — they specifically look for it.

I've owned a foreign property for 5 years and never filed T1135. What do I do?

Don't panic — this is solvable. CRA's Voluntary Disclosures Program (VDP) allows Canadians who have non-compliant filings to come forward proactively, file the late T1135s, and potentially reduce penalties. The VDP requires that the disclosure be voluntary (CRA hasn't contacted you yet), complete (covering all years), and include any unpaid tax with interest. For T1135 non-compliance specifically (where T1135 is a reporting form with no additional tax — just the penalty), the VDP can often result in penalty relief. However, the window for VDP is narrower than people think — if CRA has already identified you (contacted you, sent a letter), you're no longer eligible. Act sooner rather than later; consult a Canadian tax professional who specializes in foreign compliance.

If my Mexican property is used personally but I also rent it occasionally on Airbnb, do I need to file T1135?

Yes — once you receive any rental income from the property (even one week on Airbnb), the personal-use exemption no longer applies for that year. You must file T1135 if the property's adjusted cost base exceeds $100,000 CAD. You must also report the rental income on your Canadian return (Schedule T776 for foreign rental income). The foreign rental income will typically also be subject to Mexican SAT tax (either 25% gross or net basis). The Canada-Mexico tax treaty provides a foreign tax credit mechanism to prevent double taxation, but you need to track and document Mexican taxes paid.

What is the difference between the T1135 simplified and detailed methods?

The T1135 form has two reporting methods. The simplified method allows you to report all your foreign property in aggregate (grouped categories) without itemizing each property separately — available only if the total cost of all foreign property is between $100,001 CAD and $250,000 CAD. The detailed method is required if any single property (or the total) exceeds $250,000 CAD. Under the detailed method, you must report each property individually: the country, the type, the maximum fair market value during the year, the year-end fair market value, the cost amount, and income generated. The detailed method takes more time but is straightforward with good records.

Last updated: March 24, 2026

Reviewed on March 2026 by the Compass Abroad editorial team

T1135 Compliance: What Happens If You Don't File?

The T1135 Foreign Income Verification Statement is required if the total adjusted cost base of your foreign property exceeds $100,000 CAD — but a property used exclusively for personal use (never rented) is exempt. Late filing costs $25/day, up to $2,500/year. T1135 is a reporting form; it doesn't add tax, but missing it triggers penalties and audit risk.

T1135 compliance has a significant knowledge gap: many Canadians who own foreign property either don't know about the form, don't know about the personal-use exemption, or don't realize the penalties apply even when no income is involved. Here is what you need to know.

Key Takeaways

T1135 is required if the total adjusted cost base of all your foreign property exceeds $100,000 CAD — but a property used exclusively for personal use (not rented) is exempt from this filing.
Late filing penalty is $25/day with a minimum of $100 and maximum of $2,500 per year the form is late — plus potential 5% gross negligence penalty on the amount that should have been reported.
T1135 is a reporting form only — filing it does not create additional income tax. It tells CRA what foreign property you own; separate income tax obligations (rental income, capital gains) are handled elsewhere.
The Voluntary Disclosures Program (VDP) allows Canadians who have missed past T1135 filings to come into compliance while potentially reducing penalties — this window is available but requires proactive filing.
Audit triggers for T1135 non-compliance include: foreign rental income on your return without a T1135, foreign wire transfers flagged by FINTRAC, information sharing under Common Reporting Standard (CRS), or tips.
If your foreign property cost more than $250,000 CAD, you must use the "detailed" reporting method on T1135 — not the simplified method available for properties under $250K.

What Is T1135?

Form T1135 — the Foreign Income Verification Statement — is an annual CRA form that certain Canadian taxpayers must file alongside their T1 personal return. Its purpose is to inform CRA that you own foreign property and provide identifying information about it. Crucially, T1135 is a reporting form, not a tax form: filing it does not create additional income tax. It simply tells CRA what you own. The income tax obligations from foreign property (rental income, capital gains) are handled separately on Schedule T776 and Schedule 3.

The threshold: T1135 is required when the total adjusted cost base (ACB) — roughly the purchase price plus direct purchase costs — of all your "specified foreign property" exceeds $100,000 CAD. The $100,000 is based on cost (what you paid), not current market value. If you paid $90,000 CAD equivalent for a foreign property, you are not required to file T1135 for that property alone, even if it has since appreciated to $200,000 CAD.

The Personal-Use Exemption: What Most Buyers Don't Know

Many Canadian buyers are surprised to learn that a property used exclusively for your personal use is exempt from T1135 filing. This exemption is found in the definition of "specified foreign property" in the Income Tax Act — property held "exclusively for personal use" is excluded from the category of specified foreign property entirely.

In practical terms: if you own a condo in Puerto Vallarta and use it entirely for your own vacations and never rent it to anyone, even once, even casually — T1135 does not apply. You can own $500,000 in foreign vacation property used purely personally without any T1135 obligation.

The word "exclusively" is critical. One week rented on Airbnb, one night rented to a family member, any commercial use at all — the personal-use exemption disappears for that year, and T1135 is required if the cost threshold is met. You don't get a partial exemption for partially personal use; it's all-or-nothing.

Penalties for Non-Compliance

T1135 non-compliance penalties under the Income Tax Act
Violation	Penalty	Calculation	Maximum
Late filing (T1135 filed after tax return deadline)	$25/day	$100 minimum; $25 per day from the date T1135 was due	$2,500 per year the form is late
Gross negligence (failure to file with careless disregard)	5% of the highest cost amount of foreign property	5% × highest cost of foreign property in the year	Additional to late filing penalty; no cap
False statement or omission (knowingly incorrect)	Greater of $24,000 or 5% of highest cost	Mandatory if CRA proves knowing false statement	No cap — plus potential criminal prosecution
Repeated failure to file (3+ years)	10% of highest cost	Escalated penalty for persistent non-compliance	Significantly higher than one-time non-filing

What Must Be Reported (and What Is Exempt)

T1135 reporting requirements by property and asset type
Property Type	T1135 Required?	Notes
Foreign property used exclusively for personal use	Exempt	A Mexican condo you use personally and never rent is exempt. Key word: exclusively. One rental night changes this.
Foreign property rented out (even occasionally)	Required if cost > $100K CAD	Any commercial rental use removes the personal-use exemption. Report the property on T1135 and the rental income separately.
Foreign property held in an RRSP, TFSA, or RRIF	Exempt	Registered account assets are not reportable on T1135 regardless of type.
Foreign bank accounts	Required if combined balance > $100K CAD	Foreign bank accounts count toward the $100K threshold, same as real property.
Shares in a Canadian mutual fund holding foreign securities	Exempt	The fund itself reports; you don't T1135 your mutual fund holdings.
Foreign stocks, bonds held in a non-registered brokerage	Required if cost > $100K CAD	Foreign securities in taxable accounts count toward the threshold.

How to File T1135

T1135 must be filed by the same deadline as your T1 personal return — typically April 30 (or June 15 for self-employed individuals, though any balance owing is still due April 30). You can file T1135 through most CRA-certified tax software (TurboTax, Wealthsimple Tax, etc.) or manually using the CRA form.

Simplified method (for total foreign property cost $100,001–$250,000 CAD): Report by category (Real Estate Outside Canada, Shares of Foreign Corporations, etc.) with combined totals. Faster but less granular.

Detailed method (for any single property or total exceeding $250,000 CAD): Report each property or asset individually with: country code, description, maximum fair market value during the year, year-end fair market value, cost amount (adjusted cost base), and income generated. This requires keeping good records.

The categories under which a Mexican fideicomiso would be reported: "Real estate outside Canada (other than personal-use property)" — reported at cost, then at year-end fair market value estimate.

Questions About Your Foreign Property Tax Obligations?

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T1135 Compliance: Frequently Asked Questions

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