Selling Canadian Property as a Non-Resident

What must a non-resident seller do, even if they are a Canadian citizen?

For capital property, a non-resident seller generally must notify the CRA under section 116. For depreciable or other non-capital real estate, a certificate request is optional but can protect the buyer. Report the sale on a Canadian tax return unless a filing exception applies. Canadian citizenship does not change these rules: they turn on tax residence when the property is sold (CRA: Section 116 procedures; Income Tax Act, section 116).

Section 116 depends on your tax residence when the property is disposed of. That is usually closing for a deed transfer, but a vendor's agreement for sale can set an earlier date. If your residence changed during the transaction, check the sale documents before the buyer sets the holdback; see Canadian tax residency. A tax treaty rarely removes these steps for a direct sale of Canadian real estate; any claimed treaty exemption needs to be checked against the treaty and documented (CRA: Section 116 procedures).

If you owned the property before leaving Canada, departure generally did not reset its cost to market value: Canadian real estate is normally excluded from the departure deemed sale. Check whether you signed Form T2061A and filed it with your departure-year return to elect a deemed sale, and check later cost adjustments (CRA: dispositions for emigrants; Form T2061A). See Leaving Canada for the departure filing.

Which form do I file, and when?

For a home or land held as capital property, file Form T2062. For a depreciable rental building, file T2062 for the capital gain and T2062A for depreciation recapture or a terminal loss; the forms go together. Recapture brings prior depreciation deductions back into income; a terminal loss can arise when the remaining tax cost is not recovered. Real estate held for resale, including a property caught by the residential flipping rule, uses T2062A if it is not capital property (CRA: Section 116 procedures).

For an actual disposition reported on T2062, the Act specifies registered mail within 10 days. The CRA also describes online document submission; confirm the method with the CRA when timing is tight (Income Tax Act, section 116; CRA: submission options).

How much can the buyer hold back without a certificate?

Without a section 116 certificate, the buyer can face CRA liability and may withhold 25% of the purchase price for ordinary capital property, 50% for depreciable property, or 50% for other non-capital real estate. A proposed-sale certificate generally limits exposure to the excess of the final price over the certificate limit. These are buyer protection amounts, not the seller's final tax (Income Tax Act, section 116).

If the buyer is liable, the federal remittance is due within 30 days after the end of the month of acquisition (Income Tax Act, section 116).

On a rental sale, land and building need separate values: the depreciable building can create the higher holdback exposure, while the land is capital property. Have the allocation and the buyer's closing instructions checked before funds are released (CRA: T2062 supporting documents).

How much do I pay the CRA for the certificate?

For capital property, the normal section 116 payment is 25% of the amount by which sale proceeds exceed adjusted cost base, or acceptable security for that amount. Adjusted cost base is your tax cost, generally purchase cost plus eligible capital improvements and other adjustments. If proceeds do not exceed that cost, this payment is zero, but notice is still required for a non-excluded sale. Selling costs such as commissions and legal fees are left out of the certificate calculation, though they may reduce the gain on the return. The payment is credited toward tax; it is not the final tax bill (Income Tax Act, section 116; CRA: Section 116 procedures).

The CRA may reduce the payment when a supported principal residence exemption reduces the gain. For a rental, its policy adds a T2062A payment at the applicable federal individual tax rate on recapture to the T2062 payment on the land and building gain. If recapture cannot be determined, the CRA may estimate it. The buyer's holdback exposure on the building price is separate. The CRA issues a T2064 for a proposed sale or a T2068 for a completed sale after it validates the information and receives payment or acceptable security (CRA: Section 116 procedures).

What documents go with the notice, and how long does it take?

The CRA needs evidence of the sale price and cost before it can issue a certificate. It recommends submitting a proposed-sale notice at least 30 days before closing, but gives no guaranteed processing time: the certificate follows review of a complete file and receipt of payment or security (CRA: Section 116 procedures).

If you were an affected owner during 2022, 2023, and 2024, check outstanding Underused Housing Tax returns and payments before closing: the CRA can refuse a section 116 certificate while required obligations remain unmet. No UHT return or tax is due for later years (CRA: UHT filing update; Income Tax Act, section 116).

Can I claim the principal residence exemption after moving away?

You may be able to claim it for qualifying years, but years of non-residence can reduce or eliminate it. The former home still needs a T2062 notice, even if you expect the exemption to cover the entire gain. To ask the CRA to reduce the certificate payment, attach Form T2091(IND) or a signed letter showing the exemption calculation. Report the sale and designation on your return (CRA: Section 116 procedures; CRA: T4058).

The number of eligible years, any other designated home, and a change from personal to rental use affect the exemption and cost. A subsection 45(2) election can defer the deemed sale on that change if you do not claim depreciation; you make it by filing a signed letter with your return for the change year. It does not make non-resident years eligible for the full exemption (CRA: principal residence). See Principal residence exemption for the calculation.

What changes if the property was a rental?

A rental sale can produce both a capital gain and taxable depreciation recapture. The CRA asks for T2062 and T2062A together, even if no capital cost allowance was claimed, plus the allowance schedules and evidence supporting the split between land and building (CRA: Section 116 procedures; CRA: T2062 instructions).

Past rent filings are separate from the sale. Gather any section 216 returns and NR6 approvals so the rental history can be reconciled. See Selling a rental property for gain and recapture calculations, and Non-resident landlords for rent withholding and returns.

What if two or more people own the property?

Each non-resident co-owner files their own T2062 and, where needed, T2062A for their share. The T2062 asks for each vendor's share of gross proceeds; joint tenancy and ownership with a spouse do not combine the notices (CRA: T2062 instructions; CRA: T2062A instructions).

Agree on the ownership shares, purchase costs, and land/building allocation before sending the forms. A resident co-owner's own tax position is separate from the non-resident owners' notices.

What return gets back excess tax after the sale?

If you were a non-resident throughout the sale year, use the individual income tax package for non-residents; if you left Canada that year, use the package for the province or territory where you lived when you left. The return is generally due by April 30 of the following year. Report a capital gain on Schedule 3, or business income from inventory or a flip on Form T2125. Include any principal residence designation and attach copy 2 of the certificate if one was issued. If none was issued, provide the sale and buyer-remittance details so the CRA can trace the payment. The CRA credits section 116 payments made by you or the buyer and refunds any excess after assessment; you may instead have a balance owing (CRA: T4058; CRA: non-resident return guide; CRA: Section 116 procedures).

Ask the closing lawyer whether the holdback remains in trust or has been remitted. If still in trust, give the lawyer the certificate and ask what the closing arrangements allow the lawyer to release. If remitted, claim the payment on the sale-year return. The CRA processes an early-filed return only after that tax year ends (CRA: real estate compliance; CRA: Section 116 procedures).

An exception can remove the return requirement when there is no tax payable or prior balance and each property sold was excluded or needed no payment or security for its certificate. It does not remove the return when you claim the principal residence exemption. Form NR7-R is for excess Part XIII withholding on other income, not the section 116 sale payment (CRA: T4058).

Is a Quebec sale different?

Yes. A non-resident selling Quebec real estate held as capital property generally files a separate TP-1097-V notice with Revenu Québec as well as the federal section 116 notice. Quebec's certificate and payment or security are separate, and the purchaser can face provincial liability if certificate coverage is insufficient. A non-resident with income from taxable Quebec property generally also files a Quebec income tax return to settle the provincial payment and any refund; the federal return settles the CRA payment (Revenu Québec: tax obligations; Revenu Québec: income tax refunds).

For a Quebec rental, the land may require TP-1097-V while the depreciable building uses TP-1102.1-V; inventory real estate also follows the TP-1102.1-V route. A required TP-1097-V actual-sale notice is due within 10 days unless a qualifying proposed notice was filed. The TP-1102.1-V certificate request is optional, but without a notice and payment or security, the buyer can owe 30% of the building's acquisition cost in addition to any federal amount. Provincial buyer payment is due within 30 days after the end of the acquisition month. Check both certificates with the closing lawyer before releasing funds. If you claim the Quebec principal residence exemption, include Form TP-274-V and, if applicable, TP-274.S-V with the notice (TP-1097-V instructions; TP-1102.1-V instructions).

The sale already closed without notice. What now?

If the sale closed within the past 10 days and T2062 notice is required, send it by the tenth day after disposition. If that deadline passed, send it now. Ask the closing lawyer whether the buyer still holds the money or has remitted it; if the buyer remains liable, federal remittance is due within 30 days after the end of the acquisition month. Give the lawyer the CRA case details and any certificate. The CRA can charge $25 per late day, with a $100 minimum and $2,500 maximum for a late T2062 notice; this deadline and penalty do not apply to a T2062A-only sale (Income Tax Act, section 116; CRA: failure-to-comply penalty).

Reconcile any buyer remittance with your tax number before filing the sale-year return. If the CRA assessed a late-notification penalty, penalties, interest, and relief covers a relief request. For an unreported Quebec sale, check the provincial notice and buyer-payment rules for the property (Revenu Québec: tax obligations; TP-1102.1-V instructions).

Example

Illustrative Canadian dollars. A non-resident bought a home for C$400,000 and agrees to sell it for C$600,000. Assume there are no cost adjustments and no principal residence exemption. The certificate calculation uses a C$200,000 difference, so the seller's federal payment is C$50,000, or acceptable security. Without a certificate, the buyer may hold back C$150,000 from the C$600,000 price.

Suppose the seller's eventual Canadian tax on the sale, after the return includes eligible selling costs and other relevant items, is C$30,000. If C$50,000 was paid toward section 116, the assessed overpayment is C$20,000. If the buyer remitted C$150,000 instead, the assessed overpayment is C$120,000. These figures illustrate the cash flow, not a tax-rate calculation; the actual tax and refund depend on the return.

If the buyer still holds the money when the certificate arrives, the closing lawyer handles any release under the closing arrangements; that is not a CRA tax refund.

Different for you?

• You may still be a Canadian tax resident: establish your status before closing. See Canadian tax residency.
• The home was your principal residence: its eligible years need a separate calculation. See Principal residence exemption.
• You sold within 365 days or assigned a purchase contract: profit may be business income. See Property flipping and assignment sales.
• You sold a rental, have co-owners, are closing soon, or missed the notice: the forms, allocation, and cash held at closing may need coordinated review. See tax preparation.
• You rented it before selling: earlier rent withholding is separate. See Non-resident landlords.
• You sold new residential property or a short-term rental: GST/HST may be a separate question. See GST/HST on residential property.
• You also report the sale in the United States: see US tax on property abroad.