Last week I got an email from someone in a real pickle with the CRA. They are self-employed, and their taxes have not been filed for several years. Recently they received a letter from the Canada Revenue Agency demanding a payment of $90,000 and putting a lien on their home.
As you can imagine, this got their attention! Leaving them with a lot of burning questions:
The truth is, I’m all too familiar with this situation. We’ve helped three homeowners in these exact circumstances in the past two months! There are ways to handle this, it’s just a matter of making sure you’re aware of the main factors.
Let me break it all down for you:
When a mortgage applicant is self-employed, the lender is always going to want to see their Notice of Assessment and statement of account — proving no income taxes are owing, and that tax filings are current.
“A lenders” will typically not lend to an applicant if the purpose is to pay CRA personal income tax arrears AND of course you have the lien.
Here is a winning approach that I’ve proposed in the past:
Are You In The Same Tight Spot?
If you’ve found yourself with CRA debt and you’re a homeowner, this might work for you, but of course everyone is different. It’s worth consulting with a mortgage broker who specializes in this kind of work to create a custom plan which works for your unique circumstances. You’d be surprised how many solutions are out there once you start looking!