A Complete Guide for Non-Residents Selling Real Estate in Canada
- Nov 20, 2025
- 5 min read
Updated: Apr 21
Selling real estate in Canada as a non-resident involves specific tax obligations. This guide outlines the essential rules: required forms, deadlines, federal and provincial obligations, as well as best practices to avoid excessive withholding and delayed funds.
1. Why is a certificate of compliance required?
When a non-resident sells real estate located in Canada, the tax authorities require that amounts be withheld before the proceeds of sale leave the country in the absence of a certificate of compliance. This takes the form of a fixed rate withholding tax on the sale proceeds, regardless of whether the transaction is profitable.
Another revenue agency requirement is to file a certificate application, which allows for the recovery of a portion of the amounts by estimating the tax on the actual profit from the transaction.
To do this, the non-resident seller must:
Submit a request for a certificate of compliance to the authorities (form T2062 and/or variants),
Make a payment or provide security for the estimated tax,
Obtain the certificate that will allow the buyer through his/her notary or lawyer to release the balance of the sale proceeds.
Without this certificate, the buyer may become liable for unpaid taxes, which is why withholding tax is mandatory if the certificate is not available at closing. Due to the processing time for certificate requests, the majority of transactions are completed before the certificate is issued.
2. Forms and certificates to know
T2062: Used by non-residents to request the calculation of the estimated tax on the sale of a property and obtain the certificate of compliance.
T2062A: Variant for certain classes of property, including depreciable property such as a rental property for example
T2064 (proposed disposition): If you requested the certificate before the sale was completed, a T2064-type certificate will be issued. Additional steps may be required if circumstances have changed between the initial request and the actual sale date.
T2068 (actual disposition): If you requested the certificate after the sale was completed, this certificate will be issued.
All of these processes are governed by section 116 of the Income Tax Act (Canada).
3. Deadlines and Practical Obligations
Notification to the revenue agency: the notification is done with the certificate request T2062 and it must be made promptly, ideally before the sale closes. Penalties apply if you submit the application after 10 days of the sale closing.
Processing times: the revenue agency can take several months to issue the certificate. It is therefore best to file the application well in advance, as funds withheld from the sale are not released until the certificate is received.
If the non-resident seller fails to file the certificate application within the time limit, significant penalties and interest may apply.
4. Withholding tax by the buyer/ notary or lawyer
If the certificate is not available at the time of sale:
Once the certificate is obtained, any excess portion is released to the seller.
This withholding tax can be significant and delay access to funds. Hence the importance of filing the T2062 application before closing, if possible.
5. Provincial Specifics: The Case of Quebec
The notary must withhold 25% for the Canada Revenue Agency or CRA (sometimes 50%) and 12.875% for Revenu Québec before releasing the balance to the seller.
Provincial forms (e.g., TP-1097 and other related forms) must be completed in parallel with the federal application.
In practice, the amounts withheld can reach approximately 37.875% (62.875% for depreciable property) until the certificates are received from both levels of government.
6. Tax Consequences for the Seller
The withholding or payment required by the tax authorities upon sale is based on the sale price, while the certificate is an estimate of the taxes on the net profit.
For example, a non-resident selling a property for $1 million that they would have purchased for $1 million must pay a withholding tax of $250,000 ($378,750 if in Quebec) upon sale, regardless of the profit.
When the certificate is issued, this full amount will be returned to them because, having sold at the same price as the purchase price, there is no net profit.
The seller must also file a Canadian income tax return for the year of disposition. This separate tax return for the certificates is an additional step to the certificates. At this stage, it will be possible to recover other amounts of money (with some exceptions).
7. Best Practices to Avoid Problems
File the T2062 application as early as possible. It is possible to file the application as soon as an accepted promise to purchase is obtained.
Provide the CRA with all documentation: contract, initial cost, proof of renovations, seller's contact information, etc. to avoid requests for additional information.
Coordinate with a notary (or lawyer) and a tax specialist for federal and provincial obligations. Properly preparing your application makes all the difference. There are also strategies to speed up the process.
Develop a cash flow plan that takes into account the timing of disbursements. A portion will be withheld upon sale, a portion will then be recovered when the certificates are issued, and a final portion can be recovered upon filing the final income tax return.
8. Risks and Penalties
If the buyer fails to comply with the withholding obligation:
The tax authorities may hold the buyer jointly and severally liable for the unpaid tax.
Penalties and interest may apply.
If the non-resident seller fails to file the certificate request within the time limit, significant penalties and interest may apply.
9. Professionals to consult
Notary (in Quebec) or real estate lawyer (rest of Canada): for the transaction and withholding taxes.
Tax specialist specializing in non-residents: for the preparation of forms T2062, T2062A, and related forms, in addition to the income tax return.
10. Example of a practical timeline
Upon receipt of the promise of sale: prepare documents related to the property sale and contact your tax professional to speed up the filing of the T2062.
No later than 10 days after the sale: mandatory notification to the tax authorities, if not already done.
During processing: the notary will hold the funds until receipt of the certificate.
11. Key Takeaways
A well-prepared and early-filed T2062 application avoids most problems.
Without a certificate, the mandatory withholding tax can range from 25% to 62.875% of the sale price, depending on the province and the type of property.
Coordination between the CRA, Revenu Québec, the notary, and the tax professional is key to avoiding costly delays.
12. Other Laws and Programs
Before issuing certificates, tax authorities will verify the compliance of all other programs they administer. This is their last opportunity to pay themselves with withholding funds.
So make sure you are up to date with your tax obligations for the following programs:
Personal Taxes
If you have resided in Canada in the past, make sure you have filed all your returns, including the return for the year you left.
Underutilized Housing Tax
If you are a non-resident (other than a Canadian citizen or permanent resident) who owns real estate, you are required to file an underutilized housing tax return, regardless of your use of the property. There are exemptions for paying this tax, but no exemption exempts you from filing this return. The Act provides for significant penalties if you fail to file this return, regardless of your use of the property.
Reporting Rental Income by a Non-Resident
If you rent out real estate in Canada as a non-resident, you must withhold tax (Part XIII of the ITA) and you can/must also report this rental income annually (in a return known as "Section 216," named after the relevant section of the Act). You guessed it, there are also penalties for non-compliance.
If you find yourself in this situation, we can advise on strategic tax updating solutions that can sometimes help avoid these heavy penalties.
