Your options for repatriating money to Canada after the sale of a property.
Selling property can be stressful enough without the worry of how you are going to get the money into your Canadian bank account. There are a couple of ways you can transfer money back to Canada after you sell a house overseas. Read on to find out your best option for overseas money transfers.
Receiving an international money transfer from overseas
Why you should use an international money transfer company
A bank cheque or deposit can be convenient, but this convenience can cost you thousands, if not tens of thousands of dollars. When transferring international currency to Canada via your bank, your bank uses its own exchange rate to convert the funds into Canadian dollars. This exchange rate is often less than ideal.
International money transfer companies provide bank-beating exchange rates, and some even give best rate guarantees. If you can find a better exchange rate, they’ll beat it, as long as it’s above the interbank rate.
Foreign exchange companies specialize in international currency transactions. When you’re dealing with the sale of a property, you must take the time to compare international money transfer companies and find the one that’s best for you. A small difference in the exchange rate could change your bottom line by thousands of dollars. Looking at a transfer of $500,000, a 0.01% change in the exchange rate makes a $500 difference to the final total.
What to look for in an international money transfer company
- International offices. As you’re dealing with the sale of a foreign currency and the purchase of Canadian dollars, it helps if the international money transfer company has offices overseas as well as in Canada.
- Service and support. It’s a bonus if an account manager can be assigned to help you repatriate the funds to Canada. They will be able to help you get the best rate as well as identify any issues you may encounter with the money transfer.
- The best exchange rate. Most international money transfer companies will give you a bank-beating rate. Some can guarantee you get the best rate on your international money transfer.
Which international money transfer companies offer a best rate guarantee?
- TorFX. TorFX provides bank-beating exchange rates and also specializes in repatriating money to Canada. Part of this service includes a best rate guarantee, a personal account manager to help you with the international transfer and the ability to fix a rate two years in advance. To get the TorFX best rate guarantee, you need to show evidence of a competitor’s quote with the better rate before you agree to the transfer, and the foreign exchange rate has to be above the interbank rate.
- Travelex. Travelex also give customers an international price promise. You must provide a like-for-like competitor’s quote with a better price to Travelex within 30 minutes.
What about capital gains tax?
You must pay capital gains tax (CGT) on the sale of overseas property, and you must include the sale of the asset on your Canadian tax return so the income can be assessed by the Canada Revenue Agency.
If you’ve paid a foreign tax in Canada, you may be eligible for the government’s foreign income tax offset. This stops you from paying tax twice on an asset.