Do I Need to File T1135?

What Is T1135 and Why Does the CRA Require It?

The T1135 Foreign Income Verification Statement is a CRA information return — separate from your T1 personal income tax return — that requires Canadian tax residents to disclose foreign property when the total cost of all such property exceeds CAD $100,000 at any point during the tax year. It was introduced in 1997 and significantly strengthened in 2013 as part of Canada’s broader effort to combat offshore tax evasion and ensure Canadians are reporting foreign income.

The form itself is not a tax payment mechanism — filing T1135 does not create a tax liability. What it does is tell the CRA that you hold foreign property, which then allows the CRA to cross-reference your rental income reporting (on Schedule T1 or a foreign rental income statement), your capital gains on disposition, and your foreign income credit claims. The T1135 is the CRA’s intelligence-gathering tool. Missing it doesn’t mean you owe more tax — it means you’ve potentially hidden a filing obligation that, upon discovery, results in penalties layered on top of any underlying tax owing.

T1135 applies to: Canadian resident individuals, Canadian resident corporations, Canadian resident trusts, and partnerships where at least one partner is a Canadian resident. If you are a non-resident of Canada for tax purposes, T1135 does not apply — but that raises a different set of obligations entirely. If you’re unsure of your residency status (particularly if you’ve spent significant time abroad), read our departure tax guide before proceeding.

The majority of Canadians who buy property in Mexico, Portugal, Costa Rica, the Dominican Republic, Panama, or Ecuador will exceed the $100,000 threshold. As of 2025, a two-bedroom condo in Puerto Vallarta starts at roughly CAD $220,000. That property is a T1135 obligation — full stop. The only common exemption is personal-use property, discussed below.

The $100,000 Threshold: Cost, Not Market Value

The most common misunderstanding about T1135 is the threshold measure. The CRA uses cost — specifically the “adjusted cost base” as defined in the Income Tax Act — not current fair market value. This has concrete implications in both directions.

Property below the threshold at cost, now worth more:If you bought a Playa del Carmen condo in 2015 for USD $65,000 (approximately CAD $82,000 at the time), and it’s now worth USD $180,000, you are still below the T1135 threshold based on original cost — assuming no capital improvements. No T1135 required. Note: when you eventually sell, you will have a capital gain (calculated in Canadian dollars), and that must be reported.

Property above the threshold at cost, now worth less:If you paid CAD $110,000 for an Ecuadorian apartment that’s currently worth CAD $70,000, you are still above the T1135 threshold and must file. The CRA’s threshold is based on what you paid, not what it’s worth today.

What goes into “cost”?Purchase price plus all acquisition costs: legal fees, notary fees, land transfer taxes or equivalent, real estate agent commission if paid by the buyer, and any capital improvements made after purchase. Currency: convert to Canadian dollars using the Bank of Canada annual average exchange rate for the year the cost was incurred. If you made improvements over multiple years, each year’s costs are converted at that year’s rate.

The $100,000 is aggregate, not per-property. If you own three foreign properties each costing CAD $45,000, their aggregate cost is $135,000 — above the threshold — and T1135 is required even though no single property exceeds $100,000.

The Personal-Use Property Exemption: What Qualifies?

Section 233.3(1) of the Income Tax Act excludes from the T1135 reporting obligation “real property situated outside Canada that is used primarily for personal use and enjoyment of the individual.” This is the most important exemption for Canadian vacation property owners — but it comes with important nuances.

“Used primarily for personal use” means used more than 50% of the time by the owner (or a related person) during the year. If your Mexican vacation home sits empty from April through October and you use it in November through March, it may well qualify as primary personal use — you used it for all of the time it was used.

The rental complication: Once you rent out your property — even for a few weeks — the personal-use analysis becomes factual and depends on proportional use. If you rent it for 120 nights and use it personally for 60 nights, the rental use exceeds personal use and the exemption likely fails. If you rent for 40 nights and use it personally for 100 nights, personal use is primary and the exemption likely applies. The CRA can audit the actual usage, so record-keeping matters.

Vacant property:A property that sits empty all year is not “used primarily for personal use” in any meaningful sense. The CRA’s interpretation guidance is not fully definitive on this point, but prudent practice is to treat a vacant foreign property over $100,000 cost as potentially subject to T1135 and to seek professional advice on the specific facts.

If your property qualifies for the personal-use exemption, you still have an obligation: real property owned outside Canada must be disclosed on Schedule T of the T1 return. T1135 is the more detailed disclosure (income, maximum cost, etc.) — but even the Schedule T disclosure is missed by many filers whose accountants aren’t familiar with foreign property rules.

T1135 Penalty Schedule: What Happens If You Don’t File

The T1135 penalty regime is tiered based on culpability, and the numbers are material enough to demand attention. Many Canadians assume that if they owe no underlying tax (because they had no rental income and didn’t sell), missing T1135 is a minor infraction. It is not.

A practical example: if you purchased a CAD $250,000 property in Playa del Carmenin 2022 and have never filed T1135, you are potentially 3 years non-compliant (2022, 2023, 2024 tax years). At $2,500 per year (basic late-filing maximum), that’s $7,500 in penalties — before any interest. If the CRA classifies the non-compliance as a repeated failure (year 2 onward), the penalty can reach $12,000 for the later years. On a gross negligence assessment for a $250,000 property, the penalty could be 5% = $12,500 per year of non-compliance.

The CRA has been progressively more aggressive in identifying non-compliance through information exchange with FATCA (the US Foreign Account Tax Compliance Act), the Common Reporting Standard (CRS), and bilateral exchange of information treaties. If you have a rental property and the foreign country is reporting that income to its own tax authorities, there is a meaningful probability the CRA can cross-reference it. The voluntary disclosure path, discussed below, is the appropriate response for past non-filers.

T1135 Filing Deadline and How to File

The T1135 is due on the same date as your T1 return — April 30 for most Canadian individuals, or June 15 if you or your spouse are self-employed (though any tax balance owing remains due April 30, and T1135 follows the same date even for self-employed filers where the underlying return is June 15 — consult a tax professional on this point).

Filing methods: T1135 can be filed electronically (via NETFILE, if your tax software supports it), through a registered EFILE service provider (your accountant), or on paper by mailing the form to the same tax centre that processes your T1 return. Electronic filing is strongly preferred — paper submissions at a separate address from your T1 can cause mismatches.

If you have previously filed T1 returns without T1135, you cannot simply amend the old T1 to add T1135 — you file T1135 for each open year as a stand-alone late filing. Open years for CRA assessment are generally the last 3 years (4 years for non-arm’s length transactions), but T1135 non-disclosure can extend the normal reassessment period. A CRA tax professional or cross-border accountant can advise on which years need to be caught up. See our guide on Canadian tax obligations for foreign property for the full context.

Common T1135 Scenarios for Canadian Property Owners

These scenarios are general guidance — individual facts may change the analysis. When in doubt, consult a tax professional.

T1135 and the Broader Tax Picture for Canadians Buying Abroad

T1135 is the disclosure mechanism. It interacts with several other Canadian tax obligations that foreign property owners must manage annually:

• •Foreign rental income: If your property earns any rental income — including occasional Airbnb rentals — you must report that income on your T1 each year, even if you paid foreign tax on it. The foreign tax credit prevents double taxation in most cases, but only if properly claimed.
• •Capital gains on sale: When you sell, the gain must be reported to the CRA in Canadian dollars — calculated as proceeds (in CAD at the rate on sale date) minus adjusted cost base (in CAD at the rate on purchase date). Currency appreciation alone can generate a taxable gain even if the property value in the foreign currency was flat. See our capital gains guide.
• •Principal residence exemption: If you lived in the foreign property as your principal residence for any year, you may be able to claim the principal residence exemption on those years — but there are restrictions. Read our principal residence guide for the rules.
• •Estate planning: Foreign property passes according to the laws of the country where it is located — not Canada. If you own a Mexican condo in fideicomiso, the trust succession rules apply. If you own outright in Costa Rica, Costa Rican probate applies. Read our estate planning guide to understand the interaction between your Canadian will and foreign property succession.

The full picture of Canadian obligations for foreign property owners is covered comprehensively in our Canadian Tax Guide for Foreign Property. We strongly recommend reading it before you close on any purchase.