Canadian Taxes on Foreign Property: T1135, Capital Gains, and What You Actually Owe

Why CRA Cares About Your Foreign Property

Canada taxes its residents on their worldwide income — every dollar earned anywhere on earth is reportable to CRA if you are a Canadian tax resident. This fundamental rule, embedded in the Income Tax Act since its inception, is why owning a condo in Puerto Vallarta or Lisbon is not simply a foreign matter — it creates Canadian tax obligations that follow you home every April.

The scope of CRA's interest goes beyond income. Beginning in 1998, Parliament introduced section 233.3 of the Income Tax Act — the Foreign Income Verification Statement (T1135) — as an information-gathering tool. The goal was to identify Canadians holding significant foreign assets, even when those assets generated no income in a given year. CRA uses T1135 data to cross-reference against information received from foreign tax authorities under the Common Reporting Standard (CRS), the FATCA agreement with the United States, and bilateral tax information exchange agreements with over 90 countries, including Mexico and the Dominican Republic.

CRA's enforcement posture on foreign income has intensified materially since 2015, when the Offshore Compliance Program was expanded and the Voluntary Disclosures Program (VDP) was narrowed. Canadians who once assumed their foreign rental income was invisible to CRA now face information-sharing regimes that surface that income automatically. Mexican banks report account balances and significant transactions to SAT; SAT shares with CRA under the CRS framework. Your offshore property is no longer invisible — it's just a matter of when, not whether, CRA sees it.

The practical consequence: voluntary compliance is both legally required and financially rational. Self-reporting and claiming legitimate foreign tax credits almost always produces a lower net tax cost than being caught under-reporting. The financing decisions you make when buying and the records you keep from day one determine how clean your eventual tax position is. This guide gives you the framework to stay onside from the start.

One important clarification before diving in: the tax rules discussed here apply to Canadian tax residents — people who maintain their primary life connections in Canada and file a T1 General return annually. If you are considering formally emigrating from Canada, the departure tax rules (section 128.1) create a different and significantly more complex set of obligations, which we cover in detail in the departure tax section below.

T1135: Foreign Income Verification Statement — The Complete Guide

The T1135 Foreign Income Verification Statement is an annual CRA information return required under section 233.3 of the Income Tax Act. It must be filed whenever the total cost of all your specified foreign property exceeded CAD $100,000 at any point during the tax year. Note the word "any point" — if your foreign property cost crossed $100,000 on June 15 and you sold it on June 20, you still had the obligation in that year.

The threshold measures cost, not fair market value. A property you bought for $120,000 CAD that dropped to $75,000 in market value still requires T1135 because the cost exceeded the threshold. Conversely, a property bought for $80,000 CAD that tripled in value does not trigger T1135 based on appreciation alone. For properties purchased in a foreign currency, cost is converted to CAD at the Bank of Canada exchange rate on the acquisition date — not the current rate.

What Is Specified Foreign Property?

Specified foreign property under the ITA includes: foreign real estate held for rental or investment, funds held in foreign bank accounts, shares of foreign corporations held outside registered accounts, interests in foreign trusts, foreign bonds or debentures, and interests in non-resident partnerships. The $100,000 threshold is cumulative across all categories — $50,000 in a US brokerage account combined with a $70,000 pre-construction deposit on a Playa del Carmen condo crosses the threshold.

The Personal-Use Property Exemption

The exemption that surprises most buyers: personal-use foreign property is explicitly excluded from T1135. Under paragraph 233.3(1)(b) of the Income Tax Act, property used primarily for the personal use of the taxpayer or a related person is not "specified foreign property" for T1135 purposes. A beachfront condo in Cabo San Lucas that you use for personal vacations and do not rent — even if it cost $600,000 CAD — is not subject to T1135 reporting while it remains personal-use property.

The exemption is binary and lost the moment the property's use shifts. Once you begin renting — even casually through Airbnb for two weeks per year — the property may lose its personal-use character and become specified foreign property. CRA's position is that mixed-use property (personal and rental) is generally not "used primarily" for personal use and therefore requires T1135 if cost exceeds $100,000. The moment rental use begins, file T1135 that year. Retroactive corrections are possible via an amended return or the VDP, but they attract scrutiny and potential penalties.

The Two-Part T1135: Simplified vs. Detailed

Since 2014, T1135 has two reporting levels. Part A (Simplified Reporting) is available if your total specified foreign property cost was between $100,000 and $250,000 CAD throughout the year. Under Part A, you report the total cost in broad categories (foreign real estate, foreign bank accounts, foreign shares, etc.) without itemizing individual properties or accounts. Part B (Detailed Reporting) is required if the cost at any point during the year exceeded $250,000 CAD. Under Part B, you must list each property or account individually with country, description, cost at year-end, and income generated.

Most Canadian snowbirds with a single foreign property fall in the $100,000–$250,000 range and qualify for simplified Part A reporting. The form itself is relatively short — the compliance burden is manageable with an accountant who handles foreign property regularly.

T1135 Filing Deadline and Penalties

T1135 is due on the same date as your T1 General return: April 30 for most taxpayers; June 15 if you or your spouse are self-employed (though any balance owing is still due April 30). If T1135 is filed late, the penalty under ITA section 162(7) is $25 per day, up to $2,500 minimum for a first failure. If CRA sends a demand notice and you still fail to file, additional penalties apply: a minimum of $500/month up to $12,000 for an extended failure. Gross negligence (knowing omission) triggers penalties of up to 5% of the highest cost of unreported foreign property — on a $500,000 property, that's $25,000 per year. CRA has extended the normal three-year reassessment period indefinitely for unreported foreign income; there is no statute of limitations protecting a non-filer.

When T1135 Applies to Pre-Construction Deposits

A common question for buyers purchasing pre-construction in Mexico or the Caribbean: does T1135 apply before the property is completed? Yes. A deposit on a pre-construction condo is a specified foreign property from the year the deposit is made, if the deposit itself exceeds $100,000 CAD. The cost base is the total amount paid to date — each deposit payment that brings the cumulative total over $100,000 triggers T1135 in that year. Track your deposits in CAD from the first payment.

Reporting Foreign Rental Income to CRA: Form T776

Foreign rental income is reported on your Canadian T1 return using Form T776 (Statement of Real Estate Rentals) — the same form used for domestic Canadian rental properties. The fact that the property sits in Mexico, the Dominican Republic, or Costa Rica changes nothing about the reporting obligation — all rental income earned by Canadian residents is taxable in Canada regardless of where the property is located or whether you collected the income in a foreign currency.

All amounts on T776 must be reported in Canadian dollars. For income received throughout the year in a foreign currency, use the Bank of Canada average annual exchange rate. For a single large payment, use the rate on the date the payment was received. CRA's IT-95R interpretation bulletin clarifies that the average annual rate is acceptable for recurring rental income — you do not need to convert each monthly payment individually.

Eligible Rental Expenses for Foreign Property

Against your gross foreign rental income you can deduct all "reasonable" expenses incurred to earn that income. CRA-recognized deductible expenses for a foreign rental property include: property management fees (common for absentee Canadian owners using local management companies), maintenance and repairs, insurance premiums, mortgage interest on a loan used to acquire or improve the rental property, property taxes paid in the foreign country (Mexican predial, Dominican DGII assessments), the annual fideicomiso bank trust fee if the property is held through a Mexican fideicomiso trust, utilities paid by the owner rather than the tenant, advertising and booking platform fees (Airbnb's host fees are deductible), and reasonable professional fees for accounting related to the rental.

For mixed-use properties — those used personally for part of the year and rented for the rest — all expenses must be prorated by the rental-use percentage. If you rent for 16 weeks and use personally for 36 weeks, roughly 31% of the year is rental use, and 31% of annual fixed costs (insurance, property taxes, mortgage interest, fideicomiso fee) are deductible. Variable costs that apply specifically to the rental period (cleaning fees, management fees, Airbnb costs) are 100% deductible as rental expenses.

Currency Conversion and Record-Keeping

Maintain a CAD-equivalent ledger of all income and expenses from day one of rental operations. The Bank of Canada publishes historical exchange rates at bankofcanada.ca — save the annual average rate every year. If CRA audits your foreign rental property returns, you will need to demonstrate both the foreign-currency amounts (from local receipts) and the CAD equivalents (from your conversion records). Foreign-language receipts are acceptable, but having a brief English description alongside them is advisable. Property management statements in Spanish or Portuguese are common — these are acceptable documentation.

If the rental property produces a net loss after expenses (common in the early years or when mortgage interest is high), that loss is generally deductible against your other Canadian income, subject to CRA's reasonable expectation of profit test. CRA will scrutinize rental losses claimed year after year — a genuine business plan to eventually turn a profit is important documentation if your foreign rental runs at a loss for multiple consecutive years.

See our complete guide to buying property abroad as a Canadian for detailed discussion of how to structure rental operations to maximize deductibility from day one.

Capital Gains When Selling Foreign Property: ACB, Currency, and Timing

When you sell a foreign property, the capital gain or loss is calculated entirely in Canadian dollars — which means currency fluctuation affects your reported gain independently of any change in property value. This is one of the most financially consequential mechanics that Canadian buyers underestimate when purchasing abroad. A property that breaks even in USD terms can still produce a substantial taxable gain in CAD if the Canadian dollar weakened significantly during your ownership period.

Example: You purchase a condo in Puerto Vallarta for USD $400,000 in January 2020 when the USD/CAD rate is 1.32, giving you a CAD cost base of $528,000. You sell in 2026 for USD $450,000 when USD/CAD is 1.42 — proceeds of $639,000 CAD. Your capital gain is $111,000 CAD, even though you only gained $50,000 USD in property value. Add closing costs at purchase (converted at 2020 rates) to the ACB, and the net gain reduces — but the currency effect is real and inescapable.

Building Your Adjusted Cost Base (ACB)

Your Adjusted Cost Base (ACB) is the total of all costs to acquire and improve the property, converted to CAD at the rates on the dates each cost was incurred. For a Mexican property, this includes: the purchase price (converted at closing-date rate), the notary fee (notario público), the ISAI acquisition tax (roughly 2% of assessed value), the fideicomiso setup fee (first year), the real estate agent's commission if paid by the buyer, and legal fees. All of these are closing costs that increase your ACB and reduce your eventual capital gain.

Capital improvements made during ownership also add to the ACB — a kitchen renovation costing MXN 350,000 in 2023, converted to CAD at that year's rate, is an ACB addition. Routine maintenance and repairs do not add to ACB; they are deductible as current expenses if the property is rented. Keep a permanent file of all capital improvement receipts — they reduce a taxable gain that may crystallize years or decades later.

The 50% Inclusion Rate and Effective Tax Rate

Canada's capital gains inclusion rate is 50% — meaning half of the net gain is included in your taxable income for the year. At a 46% marginal rate (the combined federal-provincial top rate in Alberta, for example), your effective capital gains tax rate is approximately 23% of the net gain. At 43%, it's 21.5%. These rates apply whether the property is in Mexico, Portugal, or anywhere else. There is no separate "foreign capital gains" rate — the same rules apply as for selling Canadian shares or real estate.

Note: the federal Budget 2024 proposal to increase the inclusion rate to 2/3 for gains over $250,000 annually was tabled but not enacted as of early 2026. The 50% rate remains in effect. Verify the current rate with a tax professional before planning a sale, as this is an area of ongoing legislative activity.

No Principal Residence Exemption for Foreign Property

There is no principal residence exemption for foreign property. The Canadian principal residence exemption (PRE) applies exclusively to a housing unit in Canada that is "ordinarily inhabited" by the taxpayer or a family member during the year. Your Mexican condo — even if you spend six months a year there — does not qualify. The exemption's definition of an "eligible property" requires it to be in Canada. This is a hard rule with no exceptions; there is no election, no treaty provision, and no administrative position that extends the PRE to foreign real estate.

This is one of the starkest contrasts with US tax law, where a non-US person selling US real estate may qualify for an equivalent exclusion in some circumstances. For Canadians, the full capital gain on a foreign property sale hits your return as taxable income in the year of sale — plan the timing of your exit carefully relative to other income sources that year.

The Foreign Tax Credit (T2209): Avoiding Double Taxation

The foreign tax credit (FTC) is the mechanism by which Canada prevents true double taxation on income that has already been taxed by a foreign government. It is claimed on Form T2209 (Federal Foreign Tax Credits). The FTC reduces your Canadian federal income tax dollar-for-dollar by the foreign income tax paid, subject to an important limitation: the credit cannot exceed the Canadian federal income tax attributable to the foreign income. You cannot use a foreign tax credit to reduce your Canadian tax below zero.

T2209 divides foreign income into two categories: business income and non-business income. Rental income from a foreign property is generally non-business income unless you operate the property as a business (full-time active management, multiple properties). Capital gains on the sale of foreign property are also generally non-business income for T2209 purposes. The distinction matters because business income FTCs carry forward three years and back one year; non-business FTCs carry forward ten years with no carryback.

How the FTC Works for Mexican Rental Income

Mexico's SAT (Servicio de Administración Tributaria) withholds approximately 25% on gross rental receipts from non-resident foreign owners — Canadians included. On CAD $40,000 of gross rental income, Mexico withholds $10,000. You report the full $40,000 on your T776, deduct allowable expenses, and arrive at, say, $25,000 net rental income on your Canadian T1. CRA taxes that $25,000 at your marginal rate — at 43%, that's $10,750 in Canadian federal tax. Your T2209 credit for the $10,000 Mexican tax paid reduces the Canadian tax to $750 owing in Canada (plus provincial tax, which has a separate provincial FTC mechanism on Form T2036).

Key nuance: the FTC is computed on the net income basis. Mexico withholds on gross income; Canada taxes on net income. If your expenses are high (large management fees, property taxes, fideicomiso fees, mortgage interest), your Canadian net rental income may be quite low, limiting how much of the Mexican withholding you can credit. Excess FTC can be carried forward ten years to offset future Canadian tax on the same property's income.

FTC on Capital Gains from Foreign Property Sales

When you sell a foreign property, the foreign country may withhold tax on the gross sale proceeds. Mexico applies ISR (Impuesto Sobre la Renta) withholding — the buyer's notario withholds either a flat 25% of gross proceeds or 35% of net gain, whichever the seller elects. This foreign capital gains tax (once converted to CAD) is creditable on T2209 against your Canadian tax on the same capital gain. A practical exit tax planning exercise: structure the Mexican sale to use the 35%-of-net method if your Mexican gain is significantly lower than gross proceeds, then credit the Mexican ISR against your Canadian tax, minimizing combined exposure.

T2209 for Countries Without Treaties

Canada does not have income tax treaties with Costa Rica or the Dominican Republic. The absence of a treaty does not eliminate the FTC — you can still claim T2209 for income taxes actually paid in those jurisdictions. However, without a treaty, there are no reduced withholding rates and no treaty tie-breaker rules for residency disputes. You pay whatever the foreign country charges, then credit it against Canadian tax as far as the credit goes. For Costa Rica (no treaty, ~15% rental withholding) and the DR (no treaty, ~27% DGII withholding on gross), the mechanics are the same as with treaty countries — the credit still applies — but you lose the negotiated rate reductions that treaty countries provide.

OAS, CPP, and GIS: What Happens to Your Benefits When You Own Property Abroad

Owning foreign property has zero effect on OAS, CPP, or GIS eligibility or payment amounts. This is perhaps the most widely misunderstood aspect of cross-border property ownership among Canadian buyers. All three programs are asset-blind — they do not means-test against property values, bank balances, or foreign holdings. OAS is based solely on years of Canadian residency after age 18 (minimum 10 years to qualify; 40 years for a full pension). CPP is based exclusively on career contributions made during employment or self-employment in Canada. GIS is income-tested, not asset-tested — your Mexican condo does not count as income in the GIS calculation, though any rental income from it does (net rental income is included in the income calculation that determines GIS entitlement).

The picture changes significantly if you cease to be a Canadian tax resident. Once you formally become a non-resident — by permanently emigrating, filing a departure return with CRA, and losing your primary Canadian residential ties — OAS becomes subject to non-resident withholding tax of 25% flat under ITA section 212, or the treaty rate (typically 15–25% depending on the country). Under the Canada-Mexico treaty, the non-resident withholding rate on OAS is 25%. Under the Canada-Portugal treaty, it is 15%. CPP receives similar non-resident treatment.

GIS is more complex: once you are a non-resident for more than six months in a calendar year, your GIS entitlement is suspended for months spent outside Canada. The OAS Act requires GIS recipients to be present in Canada for at least six months per year to maintain eligibility. This is a residency-based cutoff entirely separate from tax residency — it affects low-income seniors who winter abroad, not middle-income snowbirds who aren't GIS-dependent.

For snowbirds who maintain their Canadian home, spend 4–5 months in Mexico, and continue filing Canadian T1 returns — the standard Compass Abroad buyer profile — OAS and CPP continue exactly as they would if you had never set foot abroad. The OAS and CPP implications of moving abroad only arise when a permanent relocation is contemplated.

RRSP and TFSA Implications of Owning Foreign Property

Your RRSP and TFSA are entirely separate from your foreign property ownership — they are registered accounts governed by their own rules, and the foreign property reporting obligations (T1135, T776, T2209) do not extend inside registered accounts. Foreign investments held within an RRSP or TFSA are explicitly exempt from T1135 reporting. This is a significant planning advantage: if you hold foreign equity ETFs, US dividend stocks, or international bonds inside your RRSP or TFSA, none of that triggers T1135 regardless of value.

However, there is an important TFSA nuance for US holdings: the US Internal Revenue Service does not recognize the TFSA as a tax-exempt account. US dividends paid to a Canadian TFSA are subject to 15% US withholding tax at source under the Canada-US tax treaty, and that withholding is not recoverable — there is no Canadian mechanism to claim it back because it was withheld inside a tax-sheltered account. Canadians holding significant US dividend stocks should consider holding them inside an RRSP instead, where the Canada-US treaty explicitly exempts RRSP accounts from this withholding.

When buying foreign property with money drawn from your RRSP, the withdrawal is taxable in Canada at your marginal rate in the year of withdrawal. This is not specific to foreign property — any RRSP withdrawal triggers income inclusion. Some buyers consider using the Home Buyers' Plan (HBP) to fund a portion of a foreign property purchase, but the HBP is available only for the purchase of a "qualifying home" in Canada — foreign property does not qualify. The Lifelong Learning Plan (LLP) similarly applies only to Canadian post-secondary programs.

For financing a foreign purchase, the most common registered-account-adjacent strategy is borrowing against your registered portfolio via a securities-backed line of credit, rather than withdrawing from your RRSP or TFSA. The interest on a loan used to fund a rental property may be deductible if the income-earning purpose is clear; however, this is a complex area and requires specific tax advice.

See our dedicated guide on RRSP and TFSA rules for Canadians with foreign property for a deeper treatment of registered account strategy in a cross-border context.

Departure Tax: What Happens If You Leave Canada Permanently

If you permanently emigrate from Canada — selling your Canadian home, moving your family, and spending the majority of your time in a foreign country — you will be treated as having ceased Canadian tax residency on your departure date. Under ITA section 128.1, on that date you are deemed to have disposed of all of your property (except certain excluded assets) at fair market value. This "deemed disposition" crystallizes all unrealized capital gains as of departure date and includes them in your final Canadian income tax return. This is departure tax — one of the most significant and least anticipated tax bills a Canadian can face.

The deemed disposition applies to: shares and securities held outside registered accounts, interests in partnerships, foreign real estate (including your Mexican or Portuguese property), certain interests in trusts, and personal-use property with an ACB over $10,000. It does not apply to: Canadian real estate, RRSPs, TFSAs, CPP, OAS, and pension entitlements — these are governed by separate non-resident withholding rules rather than the deemed disposition.

Practical example: A couple emigrates to Portugal permanently. They hold: a non-registered investment portfolio of $800,000 with an ACB of $400,000, and a Portuguese apartment worth CAD $600,000 with an ACB of $400,000. Departure tax applies to both. Portfolio gain: $400,000 × 50% = $200,000 taxable. Property gain: $200,000 × 50% = $100,000 taxable. Total additional taxable income in final year: $300,000 — potentially $130,000+ in Canadian federal and provincial tax due.

Tax deferral option: Under ITA section 220(4.5), you can defer the departure tax by posting security with CRA (typically government bonds or a bank guarantee) equal to the tax owing. This lets you delay payment until you actually sell the assets, rather than paying a large tax bill in the year of departure when you may not have liquid funds. The deferral is not automatic — you must elect it on your departure return and post the security. File Form T1161 (List of Properties — Emigrant of Canada) with your final T1 return listing all properties subject to the deemed disposition.

If you are considering emigrating while also holding property in a treaty country, the treaty may affect how departure tax interacts with the foreign country's tax on the same gain. The Canada-Portugal treaty, for example, provides a tie-breaker rule for determining residency — a cross-border tax advisor familiar with both Canadian and Portuguese tax law is essential before completing any such move. See our guide on the Portugal IFICI tax regime for Canadians for the interaction between departure tax and Portugal's new preferential tax program.

Country-by-Country Tax Treaty Quick Reference

Canada has bilateral income tax treaties with over 90 countries. These treaties serve three primary functions for foreign property owners: (1) they cap withholding tax rates on cross-border income streams, (2) they provide a residency tie-breaker mechanism to resolve dual-residency disputes, and (3) they prevent double taxation through credit and exemption methods. The table below summarizes the treaty position for the primary countries where Canadians buy property, based on the most current treaty text. Rates and provisions can change — verify with a cross-border tax specialist before making decisions based on this table.

For buyers deciding between Mexico and Portugal, both have active treaties with Canada — the treaty coverage is comparable in terms of preventing double taxation on rental income and capital gains. The difference is in withholding rates: Mexico's 25% gross rental withholding is higher than Portugal's effective rate for many tax configurations, but both are fully creditable on T2209. For buyers considering Mexico vs. Costa Rica, the absence of a Canada-Costa Rica treaty is a meaningful difference — the FTC still applies, but without treaty protections, Canadians are exposed to whatever withholding rates Costa Rica imposes without any negotiated cap.

Common Tax Mistakes Canadians Make with Foreign Property

Understanding what goes wrong for others is as valuable as knowing the correct rules. These are the most frequently documented errors and omissions that CRA auditors and cross-border tax accountants encounter with Canadian foreign property owners.

Mistake 1: Not Filing T1135 Once Renting Begins

Many buyers correctly identify that their personal-use vacation property is exempt from T1135 and stop there — without noting that the exemption is lost the moment rental begins. A buyer who purchased a $300,000 CAD condo in 2020 for personal use, begins renting it on Airbnb in 2023, and does not file T1135 for 2023 or 2024 is accumulating $25/day penalties retroactively. CRA matching programs — which cross-reference Airbnb and VRBO host data with T1 returns in increasing frequency — are actively catching this omission.

Mistake 2: Failing to Report Small Rental Income

"It's only $8,000 USD — I won't bother" is a common rationale that costs buyers significantly when CRA finds the omission years later. All foreign rental income is reportable on T776 regardless of amount or whether it was taxed abroad. The upside: deductible expenses often reduce or eliminate Canadian tax on small rental operations. The cost of not reporting — reassessment, interest, and penalties going back several years — far exceeds the tax on the unreported income.

Mistake 3: Not Tracking ACB in CAD from Day One

When you purchase your foreign property, the last thing on your mind is keeping a spreadsheet of CAD-converted closing costs. But the ACB you establish on the day of closing determines your capital gain decades later when you sell. Every $10,000 USD of closing costs that you fail to document and add to your ACB becomes $14,200 CAD of additional taxable capital gain (at 1.42 FX). Buyers who lose their original purchase documents and rely on memory-reconstructed costs routinely overpay capital gains tax on exit. Create a permanent digital file on closing day: purchase price, all closing costs, the Bank of Canada rate, and the CAD equivalent of each. Review and update it every time a capital improvement is made.

Mistake 4: Assuming the Foreign Tax Credit Fully Covers All Exposure

The foreign tax credit prevents double taxation but does not eliminate all Canadian tax exposure. If Mexico's 25% gross withholding translates to a lower effective rate on your net rental income than your Canadian marginal rate, you will still owe the difference to CRA. Example: gross rental $50,000, expenses $20,000, net $30,000. Mexico withholds $12,500 (25% gross). Your Canadian federal tax at 33% on $30,000 net = $9,900. FTC is the lesser of $12,500 and $9,900 — so you use $9,900 and carry $2,600 forward. Net Canadian federal tax: zero (this year). But provincial tax (using a separate T2036 credit) may still leave a provincial balance owing. Work with an accountant to model this in both federal and provincial components.

Mistake 5: Using an Accountant Without Cross-Border Experience

Not all Canadian accountants handle foreign property reporting. T1135, T776 for foreign rentals, T2209 FTC calculations, and departure tax planning are specialized areas. An accountant who handles only domestic T1 returns may file your return compliantly but miss significant opportunities — excess FTC carryforwards, optimal expense allocation between personal and rental use, timing of capital improvements, and exit planning that spans multiple tax years. Ask specifically about T1135 experience and foreign rental files before engaging any accountant for this work. The Compass Abroad buyer network includes referrals to Canadian cross-border tax specialists by destination country.

Mistake 6: Ignoring Estate Planning Until It's Too Late

Foreign property creates estate planning complexity that most buyers defer. In Mexico, the fideicomiso structure is a significant advantage — you can name substitute beneficiaries on the bank trust documents, enabling direct transfer on death without Mexican probate. But CRA still deems a disposition at fair market value on death, which can trigger capital gains in the terminal return. In the Dominican Republic and Costa Rica, direct title holders must go through local succession proceedings, which can take years. Having a local will (testamento) in the destination country — $500–$2,000 USD through a local notary — is best practice. It does not replace your Canadian will but ensures local succession has clear legal instructions. See our guide on estate planning for foreign property for a complete treatment by country.