Feigenbaum Law

Tax Information for Non-Residents Selling Canadian Property

Personal Tax Planning
April 13, 2017

If you are a non-resident individual or corporation that owns Canadian property, take note of these extra legal hurdles before you decide to sell your property. Canadian tax legislation requires that any purchaser of property from a non-resident can be liable for taxes if they are unpaid. In many cases, to protect against this potential liability, 25% of the sale price will be withheld by the purchaser’s lawyers until the Canada Revenue Agency (CRA) confirms that all required taxes have been remitted by the non-resident vendor.

Notify the Canada Revenue Agency within ten days of closing

Within ten days after closing, a non-resident vendor must submit form T2062 to the CRA, requesting a certificate of compliance, confirming that all tax liabilities have been satisfied.

To expedite the process, a request can be submitted in advance of closing. Since processing time can take 8-12 weeks, it should be done as soon as the contract of sale is binding.

If you do not already have one, you will also require a Temporary or Individual Tax Number (TTN or ITN) or Business Number (BN) for corporations.

Ensure payment of taxes on the sale of property

The amount of taxes payable is calculated as 25% of the net capital gain on the disposition. After the CRA has received this amount, whether it is paid directly from the vendor in advance of the sale, or out of the funds held by the purchaser’s lawyer, they will issue a certificate of compliance.

If a request for a certificate of compliance is submitted to the CRA in advance of closing, and there is any difference between the estimated taxes owing and the final amount payable, a further T2062 must be completed.

File Canadian tax returns for the year

The amount owing to the CRA based on a percentage of your net capital gain will often exceed the actual amount of capital gains tax payable on the property. Non-resident vendors should file their T1 returns to ensure they receive any available refund from the CRA.

Canadian tax advice for non-resident vendors

Feigenbaum Tax Law provides tailored tax compliance solutions for individuals and businesses with US and Canadian assets or business interests. Our experienced team includes skilled lawyers and accountants that specialize in cross-border matters, and we can assist with tax planning matters related to your property.

If you are a non-resident or American that owns Canadian property, speak to one of our tax specialists before you sell. We can help make the process as smooth as possible, and ensure that your tax liabilities are minimized.

Contact us online, or call toll free at (877) 275-4792 to make an appointment with a member of our team.

Tagged: non-resident vendor, real estate