If you are a non-resident of Canada and are selling a residential real estate property, there are additional steps and payments you will need to make in order to finalize your transaction. You will be required to submit certain documents to the Canada Revenue Agency (CRA), including the completed T2062 and/or T2062A forms available on the Government of Canada’s website. You will be required to do the same for Revenu Québec, where you will be required to submit the TP-1097 form, available on Revenu Québec’s website.
You will also be required to pay tax on capital gains and submit this payment along with your documentation.
We recommend that you have your CPA or tax specialist complete the forms to ensure that the calculations are done properly and avoid any additional delays for the obtention of the required certificates of compliance.
You will also be required to submit copies of the T2062, T2062A (if applicable), and TP-1097 forms to your Notary, for their records.
In addition, order to comply with tax laws, your Notary will be required to withhold in their trust account an amount between 37.825% and 80% of the price of sale, depending on your particular situation, until they obtain the certificates of compliance from the CRA and Revenu Québec. Once the Notary receives copies of the certificates, they will be able to release the withheld funds back to you. The usual delay for this process can normally take six (6) months to one (1) year.
It is important to note that any non-resident vendor who fails to notify the government of their disposition (sale) within 10 days of the transaction by submitting the required forms and paying the required taxes will find themselves facing penalties of up to 5000$.
If you are residing outside of Canada and are unsure as to whether you qualify as a Canadian resident, it is advised to obtain a professional opinion on the matter from your CPA or tax specialist. In most cases, your Notary is not qualified to determine whether or not you are a resident of Canada for tax purposes. If the Notary has a reason to doubt your residency (for example, if you are residing in another country at the time of sale), they will be required to withhold the funds as indicated above unless you can provide proof that you are a Canadian resident for tax purposes.
Note: please do not confuse Canadian resident and Canadian citizen! A Canadian resident is a person who lives in Canada. A Canadian citizen is a person who holds Canadian citizenship.