Clearance certificates
There Are Certain Legal And Tax Issues When A Non-Resident Of Canada Sells Property In Canada.
The majority of tax-related issues relating to non-residents arise when a non-resident is selling a property. Prior to receiving the proceeds of a real estate sale in Canada, it is necessary for non-residents selling property to obtain a Clearance Certificate from Canada Customs and Revenue Agency. The current wait for a Certificate is approximately 6-8 weeks.
Canada Customs & Revenue Agency will collect any tax payable on the property before issuing a Clearance Certificate. This also includes any tax payable on the rental income from the property that has not been remitted; capital gains tax; and, if applicable, recapture of a capital cost allowance.
Sellers should contact their accountant or lawyer concerning a Clearance Certificate as soon as an accepted offer has been received on your property. Should the completion date be prior to the issuance of the Clearance Certificate, the purchaser's solicitor will require a holdback of between 25 and 50 per cent of the sale price until the Clearance Certificate is issued.
The forgoing information is intended as a summary only – ensure you contact your Canadian lawyer or accountant to discuss these issues in greater detail.