Canadian residents must file Form T1135 (Foreign Income Verification Statement) if, at any point during the year, they own specified foreign property whose total cost exceeds CAD $100,000. Whether a particular piece of foreign real estate fits this definition depends on how the property is used.
Personal‑Use Property vs. Investment Property
The Canada Revenue Agency (CRA) separates foreign real estate into two categories. First, a property used primarily for personal enjoyment—meaning it is occupied for personal purposes more than 50 percent of the time—qualifies as personal‑use property. Such property is exempt from T1135 reporting.
Conversely, a property held with a reasonable expectation of profit is considered specified foreign property. Renting the property out for a significant portion of the year is a clear indicator that it is income‑producing. These investment properties must be reported on Form T1135.
Determining Whether to Report
To decide if a foreign property should appear on T1135, ask one simple question: Is the real estate situated outside Canada held solely for personal use and enjoyment, or is it held to earn income? If the answer is personal use, no reporting is required. If the property is intended to generate income or is held as an investment, it must be included on Form T1135.
Illustrative Examples
A vacation home abroad—such as a Florida condo—used primarily for your own holidays is excluded from T1135 reporting. A rental property located outside Canada, on the other hand, is an income‑earning asset and must be declared on the form. In short, the need to report foreign real estate on Form T1135 hinges on its primary use. Personal‑use properties are exempt, while properties held for income or investment purposes trigger the reporting requirement.
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