The T1135 question.

If you're a Canadian who's bought (or is about to buy) Costa Rica real estate, the question your accountant will ask first isn't about beach views. It's about Form T1135. Whether you must file it depends on two numbers and one decision — and getting it wrong costs you $25 a day, up to $2,500. Here is exactly how it works in 2026.

This page is written for Canadian residents (under the CRA's residency rules) who own — or plan to own — real estate in Costa Rica directly in their personal name, through a Costa Rican S.A. or SRL, or via a fideicomiso. It is not tax advice. It is a guide to the question itself, and what to bring to the cross-border CPA who actually files it for you.

What is Form T1135?

T1135 is the Foreign Income Verification Statement. It is the form the Canada Revenue Agency uses to track Canadian residents' specified foreign property when the cost base of that property exceeds CAD $100,000 at any point in the tax year. It is filed alongside your annual T1 personal return — same April 30 deadline.

It is not a tax. It is a reporting form. Filing it does not create a tax liability by itself. But failing to file it when required is its own offence — and the penalty cascade gets ugly fast.

What counts as "specified foreign property"

A few categories matter for Costa Rica buyers:

• Real estate held outside Canada — your Costa Rican home, lot, or condo, whether held in your name, a CR S.A./SRL you control, or a fideicomiso (trust)
• Funds held in foreign bank accounts — your BAC, BCR, or Banco Nacional account that holds rental income or operating cash
• Shares of foreign corporations — if you own a CR holding company that owns the property
• Debts owed by non-residents — if the property is owner-financed and you've extended credit (rare on the Canadian-buyer side)

Personal-use property (a vacation home you never rent out) is treated differently than income-producing property. That distinction is the single most-misunderstood part of T1135.

When you must file

You must file T1135 for the tax year if either of the following is true at any time during the year:

1. The total cost amount of all your specified foreign property exceeds CAD $100,000; AND
2. The property is anything other than personal-use property — i.e., it generates income (rental, capital gain on sale, etc.), or you bought it primarily for investment.

The threshold is cost base, not market value. A $295,000 USD home in Mal País at the 2026 CAD/USD rate of about 1.37 lands at roughly CAD $404,000 in cost — well above the threshold. T1135 applies the moment you close.

Most Canadian buyers underestimate this. They look at the threshold and think "$100K — easy, I'm under." Then they realize their $300K USD vacation rental is actually $410,000 CAD on the day they wired the funds. T1135 fires.

When you do not have to file

You're off the hook in three specific cases — but only one of them is common:

Case 1: Pure personal-use property

If you own a Costa Rican home that is purely for personal use — you and your family vacation there, you never rent it on Airbnb or to a long-term tenant, you never list it for sale at a profit motive — it is treated as personal-use property and is excluded from T1135 reporting.

This is the case most Canadian buyers want to land in. It works if you buy a vacation home, use it yourself, and never put it on a rental platform. The moment one Airbnb booking lands, the property is no longer purely personal-use.

Case 2: Cost base under CAD $100,000

If the cost base of all your foreign property combined is under $100K CAD, no T1135. For Costa Rica buyers this is rare — the cheapest beach lots in our inventory start around USD $80K, which converts to roughly CAD $110K and trips the threshold immediately.

Case 3: Foreign property held in registered accounts

RRSPs, TFSAs, RRIFs that happen to hold foreign property are excluded from T1135. This is irrelevant for direct real estate purchases (Costa Rica property is rarely held inside a Canadian registered account).

The penalty structure

Late or missed T1135 filings carry a tiered penalty regime. Here's the schedule [CRA T1135 Q&A]:

What information goes on T1135

The form has two layers — Simplified Reporting (cost base CAD $100K to $250K) and Detailed Reporting (cost base over $250K). Most Canadian buyers in our typical price band ($300K–$1.5M USD) are in Detailed.

Simplified Reporting (≤$250K cost base)

You disclose the country code, the maximum cost amount during the year, and the total income earned. That's it. A few lines.

Detailed Reporting (>$250K cost base)

For each property you must disclose:

• Country of residence of the property (CR — country code "CO")
• Maximum cost amount during the year (in CAD)
• Cost amount at year-end
• Income generated (rental, less attributable expenses)
• Capital gain or loss realized on disposition during the year

The conversion to CAD is done at the exchange rate in effect on the date of transaction (for cost) and at the year-end rate (for year-end balance). Keep wire confirmations and broker statements — your CPA will need them.

How to file: step-by-step

1. Pull every piece of paper from closing. Wire confirmations (CAD/USD), the escritura, the registry inscription, and any CR escrow agent receipts. Date of each transaction and the spot exchange rate that day.
2. Compute the cost base in CAD. Purchase price + legal fees + transfer fees + agent commission + any CR closing costs. Convert to CAD at the day-of-wire spot rate.
3. Determine income for the year. If the property is rented, total gross rent (in CAD) less directly attributable expenses (HOA, property tax, repairs, advertising, agent commission). Costa Rica withholding tax may apply — your CR property administrator can issue receipts.
4. Engage a Canadian cross-border CPA. File T1135 alongside your T1. The form lives inside most filing software (TurboTax, H&R Block) or your accountant's professional package. Expect to add 30–60 minutes to a typical return.
5. Save the package. CRA can audit T1135 separately. Keep the supporting documents for six years.

The Canadian-buyer-specific edge cases we see most

Buying through a Costa Rican S.A.

Many of our Canadian clients buy through a Costa Rican Sociedad Anónima (S.A.) or SRL for asset-protection and estate-planning reasons. That changes the T1135 line — you're now reporting shares of a foreign affiliate, not direct real estate. Cost base is what you contributed to the entity. Your CPA will need the entity's registration documents, the shareholder ledger, and any inter-company loans.

Owner-financing (vendor takes back the mortgage)

If we structure your deal with seller-financing — i.e., the seller carries paper instead of you taking a Canadian mortgage — the T1135 cost base is still the full purchase price (you owe it; you owe T1135 reporting on it). The seller's hipoteca registered against the property does not reduce your cost base.

Mid-year purchases

The "any time during the year" wording matters. If your cost base crossed $100K at any point — even for one day — T1135 applies for that year, even if you closed on December 28.

Cross-border CPAs we routinely refer to

We do not give tax advice ourselves. Our Canadian clients have used the firms below for T1135 + cross-border filings without issues. Names withheld here for privacy; we share them on a Discovery Call with you:

• A Toronto-based cross-border CPA practice that handles 30–40 CR-resident Canadians a year
• A Vancouver-based firm for BC clients with a CR + cross-border specialty
• A Montréal-based bilingual practice for Quebec residents (handles T1135 in both languages)

Sources: Canada.ca T1135 Q&A · CIBC T1135 Reporting PDF · TurboTax Canada T1135 guide. This page is informational only — not tax, legal, or accounting advice. Confirm your specific facts with a Canadian cross-border CPA.