Any NON-residents who have sold Canadian property?

[Nicola]

Hello,

We are contemplating selling one of our properties. As non-residents, I know we need to obtain a Certificate of Compliance from the CRA.

Has anyone had any experience with this? How complicated and/or time-consuming is it?

Would it put off potential buyers due to the extra hassle?

Thanks,
Nicola

 

[Albertritchot]

Hello Nicola,

When you are a non-resident, it is useful (actually necessary) to obtain a Certificate of Compliance so that you can get as much money from the sale of your property.

Guide T4058 does explain how to proceed in obtaining this Certificate of Compliance (see page 8 -section starting with Procedures to follow)


http://www.cra-arc.gc.ca/E/pub/tg/t4058/t4058-09e.pdf


You would need to fill out form T2062: Request by a Non-Resident of Canada for a Certificate of Compliance Related to the Disposition of Taxable Canadian Property.


Without the Certificate of Compliance, the buyer and his lawyer will want to retain 25% of the funds from the proceeds of the sale of the property. If they do not do so, they could be held responsible for the 25% of tax that you, the seller should send to Canada Revenue Agency.

If you have any further questions on the above or need to obtain telephone numbers to the International Division of Canada Revenue Agency, do not hesitate to ask. I would be more than happy to locate these for you.

Here is the web link for the International Division of CRA

www.cra-arc.gc.ca/cntct/international-eng.html


P.S. Are you certain that, in the eyes of Canada Revenue Agency, you are a non-resident? Occasionally, you can be deemed a resident. Make sure you have established with certainty that you are in fact a non-resident.

 

[Nicola]

Hi Albert,

Thank you for your detailed reply.

I`ve had a look at the online guide. However, I`m wondering a few things. First, how much hassle is it to actually get the Certificate? They say you should send it in 30 days in advance. Will they process it in less than 30 days?

Also, they mention it`s possible to provide security instead of paying the tax in advance. Any idea what they consider to be "acceptable security"?

Let`s say I have a $50k capital gain (bought for $100k, sold for $150k). I`m taxed on half, so on $25k. What kind of tax rate would I have as a non-resident? (Is it 25% like on rental income?)

Thanks,
Nicola

 

[weenapratt]

QUOTE (Nicola @ May 5 2010, 05:28 PM) Hello,

We are contemplating selling one of our properties. As non-residents, I know we need to obtain a Certificate of Compliance from the CRA.

Has anyone had any experience with this? How complicated and/or time-consuming is it?

Would it put off potential buyers due to the extra hassle?

Thanks,
Nicola
Hi Nicola,

I bought a property from non resident sellers last year. It made no difference to me whether the sellers are non residents or not. No hassle of any kind. Our lawyer handled the rest.

Good luck with your sale.

 

[JamesB]

There should not be any hassle for the buyers at all. If you dont obtain the certificate prior to closing, the buyers lawyer will withhold 25% of the purchase price in their Trust account until you get the certificate. The property should still close on time.

Cheers,

James


QUOTE (Nicola @ May 5 2010, 08:28 PM) Hello,

We are contemplating selling one of our properties. As non-residents, I know we need to obtain a Certificate of Compliance from the CRA.

Has anyone had any experience with this? How complicated and/or time-consuming is it?

Would it put off potential buyers due to the extra hassle?

Thanks,
Nicola

 

[Albertritchot]

The review of the Certificate of Compliance is made from the Tax Centre closest to where your property is located. As a result, the time required to obtain the Certificate may vary. I made a quick call to the International Office asking them your very question: How long?


Their answer was that they estimated it to be between 6-8 weeks on average but it could go up to 12 weeks in the busier Tax Centres.

With regards to Security, the most likely security that will accept is the 25% withheld by the lawyer from the sale of the property.

Hope the above helps.

Albert