Hi Hutcheson & Co. LLP,
I am a US citizen who owns a condo in Victoria, BC. The condo is currently up for sale. Once it’s sold do I need to file any forms with the CRA?
As a non-resident of Canada disposing of taxable Canadian property you will be required to file form T2062 Request by a Non-Resident of Canada for a Certificate of Compliance Related to the Disposition of Taxable Canadian Property and possibly form T2062A if the property was rented and depreciation was taken.
If there is a gain on the property you will also have to file a Canadian income tax return for the year of disposal.
Both forms will require you to have a Social Insurance Number (SIN) or an Individual Tax Number (ITN). If you do not have a SIN you can apply for an ITN by completing form T1261.
When you file the T2062 you will be required to pay the Canada Revenue Agency (CRA) 25% of the net capital gain on the property.
Form T2062 does not allow you to claim any outlays and expenses related to the sale (i.e. real estate commissions, brokerage fees and legal fees). However, you can claim these on the Canadian income tax return when reporting the sale in the subsequent year.
Form T2062 must be filed with the CRA within 10 days of the disposal date or at least 30 days before the property is actually disposed of. Significant penalties and fines are levied if the form is filed late.
You will also have to attach documents along with the form detailing the transaction and supporting your calculations. For the sale of a house or condo you will typically have to provide the offer to purchase or the sales agreement and the purchase agreement when the property was acquired.
Once submitted, the CRA will typically take around 3 to 6 months to process the form (sometimes longer), after which time they will issue a “certificate of compliance”.
It is important to ensure that these forms are prepared properly and filed on time because when a non-resident sells Canadian real estate the CRA requires that 25% of the sale price be kept in escrow by the purchaser’s lawyer until the “certificate of compliance” is received. After which, the lawyer will release the funds to you.
If you require any assistance, please contact one of our experienced professionals.
Rob Brown, CA
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