Imagine this: you’re a non-resident who owns property in Canada — maybe a rental condo in Toronto or a vacation home in Vancouver. You’ve decided it’s time to sell. You list the property, find a buyer, and agree on the price. Everything’s on track… until your lawyer mentions something about a “clearance certificate” and 25% withholding on the entire sale price.

What?! No one told you that part.

That’s when most non-residents find out: selling real estate in Canada isn’t just about signing papers and handing over the keys. There’s a layer of CRA compliance involved — and missing a step can mean unnecessary delays, big withholding, or even penalties.

Let’s walk through what actually needs to happen — and how we can help you stay ahead of it.

Understand How Withholding Works

If you’re a non-resident selling Canadian property, the default CRA rule requires the buyer to withhold 25% of the gross sale price — unless a clearance certificate is provided in time. And if the property was rented and you claimed depreciation (CCA), the withholding can go as high as 50% of the sale price.

This isn’t based on profit — it’s a flat percentage of the entire sale amount. For example, if your property sells for $800,000, the buyer may have to remit $200,000 to the CRA unless a certificate reduces that amount. Knowing this ahead of time helps explain why the certificate is so important.

Apply Early for a Clearance Certificate

Once you understand how much the CRA can withhold, the next question becomes: How can I reduce that?

The answer lies in filing Form T2062 (and possibly T2062A) to request a Certificate of Compliance — commonly called a clearance certificate. This form must be submitted within 10 days of the sale closing, but ideally, it should be filed before the closing date to avoid unnecessary delays.

By applying on time:

• ✅ You reduce the withholding to 25% of the estimated capital gain, rather than the full sale price
• ✅ You avoid late-filing penalties of $25 per day (up to $2,500)
• ✅ You keep more of your sale proceeds now, rather than waiting until next year to recover the difference through a tax return refund

When the certificate is filed late or not at all, the full withholding (often tens or hundreds of thousands of dollars) is sent to CRA — and the only way to recover any of it is to wait until the following year to file a Canadian tax return. That delay can tie up your funds for months.

Gather the Right Paperwork

To apply for the clearance certificate and later file your return, you’ll need to provide:

• The purchase and sale agreements
• The statement of adjustments showing closing figures
• A list of capital improvements made during ownership (if any)
• Rental records and Section 216 filings, if the property was rented

Accurate documentation is key to avoiding delays and calculating your capital gain correctly.

Expect to File a Canadian Tax Return

Even if the CRA withheld tax at closing, you must still file a Canadian tax return to report the actual gain on the sale. This return allows you to report capital gains and claim deductions (like legal fees, commissions, improvements, request a refund if too much was withheld and bring your CRA file up to date. If the property was ever rented, all Section 216 rental returns must be filed and assessed before the clearance certificate will be issued.

Timing Matters — Don’t Wait Until It’s Too Late

CRA processing times for Form T2062 can range from 8 to 12 weeks, sometimes longer. If your documents are incomplete or inaccurate, it can delay the issuance of your clearance certificate — and potentially delay your cash flow. And if you miss the 10-day filing deadline after the sale closes, you could be hit with CRA penalties of $25 per day, up to $2,500.

The earlier you plan, the smoother it goes.

How We Help

We work with non-residents around the world to help them navigate the Canadian tax process when selling property. Here’s how we support you:

• 📄 We prepare and file Form T2062/T2062A, with accurate calculations and supporting documents
• 📬 We liaise with the CRA on your behalf to request and obtain your clearance certificate
• 🧾 We file your Canadian tax return to report the capital gain and recover any overpaid withholding
• 🧩 We catch up on Section 216 rental filings, if needed
• 💡 We advise on exemptions and tax planning strategies, including principal residence exemption if applicable

If you’re a non-resident thinking of selling Canadian real estate, don’t wait until the last minute. Let us help you reduce withholding, avoid penalties, and get your cash in hand — faster and with peace of mind.