SOURCE: Mew & Company

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September 15, 2016 16:02 ET

Vancouver Chartered Professional Accountants Caution Non-Residents Selling Canadian Real Estate

Vancouver CPAs remind non-residents that the CRA requires the purchaser to withhold 25% of the gross sale amount

VANCOUVER, BC--(Marketwired - September 15, 2016) - Mew + Company, a team of chartered professional accountants in Vancouver, has some helpful advice for non-residents selling Canadian property. The CRA requires that purchasers withhold 25% of the gross sale amount from a non-resident. To avoid being short-changed in property sales, non-Canadians need to plan ahead. For more, go to:

The 25% of the gross sale proceeds withheld would normally be in the seller's lawyer's trust account, and this individual has the responsibility of releasing the funds to the CRA and the balance to the seller once the Certificate of Compliance has been obtained. This means that if a non-resident seller does not plan ahead, the 25% would be forwarded to the CRA, where it would stay until a tax return is filed for the year of the sale.

According to the blog, a seller can reduce the withheld amount by filing a T2062, which is a request for a Certificate of Compliance or the Clearance Certificate with the CRA.

This document can be filed for either a proposed sale or a completed sale, but it must be filed within 10 days of the date of disposition. This form requests relevant identification information as well as the documents needed to calculate the seller's anticipated capital gain from the sale.

Upon approval of the request, only 25% of the expected capital gains need to be remitted to the CRA. After this is received, a Certificate of Compliance will be issued. At this time, the purchaser can release the remaining funds to the non-resident.

For the year in which Canadian real estate is sold, a non-resident seller has the option to file a Canadian tax return to determine the actual taxes owing for the gains made on the sale.

In most cases, by filing this return, the seller will receive a tax refund from the CRA. This is because the tax filing and the selling costs (which can be significant) are deducted from the sale proceeds in the calculation of the gain for tax purposes.

Non-residents also benefit from our progressive Canadian tax rates. The 25% withholding tax on the net gain is higher than the highest tax bracket in which capital gains are taxed. This means that a tax refund is practically a certainty if the non-resident files a tax return.

Although it's complicated, by understanding and complying with CRA processes, non-residents can avoid being shortchanged in the process of selling their Canadian real estate. For professional tax advice when selling your home, contact the professional chartered accountants of Mew + Company at 604-688-9198.

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Contact Information

  • Lilly Woo, CPA, CA, CFE, CFP
    Mew + Company Chartered Professional Accountants
    604 688 9198
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