Selling Canadian property as a non-resident: T2062 and section 116

When someone who is not a Canadian tax resident sells Canadian real estate — a house, condo, cottage, or rental property — the buyer or their lawyer is normally required to withhold and remit 25% of the gross sale price to the CRA. On a $800,000 sale, that is $200,000 held back unless a Certificate is obtained first.

The fix: a T2062 and a Certificate of Compliance

Filing Form T2062 (Request by a Non-Resident of Canada for a Certificate of Compliance) asks the CRA to confirm the tax on the actual gain instead. Once the certificate is issued:

• Withholding drops from 25% of the gross price to 25% of the gain (with additional rules for depreciable rental property, where up to 50% of the gross price applies to the building's capital cost until the certificate is in hand).
• The buyer/lawyer can release the excess funds to the seller at or after closing.

Timing matters: the certificate application should be filed well before closing. Processing takes weeks, and an application filed late does not relieve the buyer's withholding duty.

What the T2062 must show

• Actual proceeds and adjusted cost base, with supporting documents.
• Disposition-date valuation — usually the agreement of purchase and sale.
• An estimate of tax on the gain, which is what the certificate authorizes the buyer to hold back.

The year-of-sale returns

• Section 216 return — for rental property, a special Canadian return reports the actual year's rental income and gain, and often produces a refund of most of the withheld amount.
• U.S. side — U.S. persons selling Canadian real estate report the sale on their U.S. return too, with foreign tax credits for Canadian tax paid. Currency conversion and capital-improvement records matter on both sides.
• Principal residence — the exemption can apply to non-residents in limited circumstances, but it must be evaluated and documented — it is not automatic.

We prepare the T2062, coordinate with the lawyer on withholding, file the section 216 and any U.S.-side reporting, and chase the certificate so the sale funds are not stuck at the CRA.