Information for Non-Residents (Sellers and Buyers)
Clearance Certificate Information
If the owner is a Non Resident, a Clearance Certificate from Revenue
There are no restrictions on non-residents purchasing property in
Non-residents may move permanently to
Non-residents may stay in
When the property is ready for occupancy in 2008 the new buyer (assignee) shall complete the sale with the Developer under the same terms and conditions per the original purchase and sale agreement. Please Note: In the event buyer two (assignee) does not complete the said transaction, the developer may go after buyer one (assignor). In this case buyer one should seek Legal Advice.
Non-residents who overstay in
Non-residents who rent out a property must, by law, remit 25% of their monthly revenue to Revenue Canada in anticipation of filing a Canadian Income Tax Return on their rental 'business' by the end of the next tax year. Timely filing of the required form confirming a net loss on the rental investment may preclude the requirement for the 25% remittance.
When a non-resident owner sells Canadian property, Canadian law requires a 25% holdback of the proceeds of the sale pending filing of a Canadian Income Tax return by the end of the next tax year calculating Canadian tax owed on any Capital Gain. Alternatively, the owner may obtain a 'Clearance Certificate' that may be applied for in advance of the sale. This Certificate may reduce the holdback to a percentage of the capital gain instead.
There is a tax treaty in effect between
A withholding tax is imposed on the GROSS selling price of a Canadian real estate property sold by a non-resident. Normally, the vendor applies for a clearance certificate (T2062) to reduce the non-resident withholding tax.
There may still be a big tax refund out there....
The non-resident vendor may potentially claim a tax refund by filing an income tax return to report the gain on the disposition. The refund is due to the following:
1. Selling costs (i.e. selling commission and other professional fees) are not deductible on the clearance certificate but are deductible on the tax return.
2. The full capital gain is subject to the 25% withholding tax on the clearance certificate whereas only 1/2 of the gain is included in the tax return.
3. The withholding tax is based on a flat rate whereas the tax returns are calculated using the personal progressive rates (for individual owners).
4. Special claims (i.e. principal residence or donation) may be available to the vendor.
*Caution: Regulations change and exchange rates fluctuate on a regular basis. This information is provided as a guideline only. For details on how any of this information may affect your taxation or legal status, please consult with your tax advisor or nearest immigration center.