How Non-Residents Sell Property in Canada

Selling property in Canada as a non-resident involves a layer of tax compliance that many sellers do not anticipate. Whether you moved abroad years ago and kept your Winnipeg property as a rental, inherited a Manitoba home while living in another country, or purchased Canadian real estate as an investment, the Canada Revenue Agency has specific rules that apply when non-residents dispose of Canadian real property. Failing to follow these rules can result in the buyer's lawyer withholding a significant portion of the sale price, delays in closing, and potential penalties from the CRA.

The cornerstone of the non-resident property sale process is Section 116 of the Income Tax Act. This section requires that when a non-resident sells certain types of Canadian property — including real estate — either a clearance certificate is obtained from the CRA before closing, or the buyer withholds twenty-five percent of the gross sale price and remits it to the CRA on the seller's behalf. Understanding this process before you list or accept an offer is essential to avoiding costly surprises.

If the property you are selling was inherited, the tax implications become more complex. Our guide on capital gains tax on inherited property in Canada explains how the adjusted cost base is determined and how the estate's tax obligations interact with your obligations as a non-resident seller.

Section 116 Certificates: What You Need to Know

Before or shortly after closing, a non-resident seller should apply to the CRA for a Certificate of Compliance under Section 116. This certificate confirms the proposed sale price and the amount of tax the seller expects to owe. To obtain it, you file Form T2062 (Request by a Non-Resident of Canada for a Certificate of Compliance Related to the Disposition of Taxable Canadian Property) along with details about the property, the sale price, your adjusted cost base, and your estimated capital gain.

The CRA typically takes four to eight weeks to process the application, though it can take longer during busy periods. This timeline is important to factor into your sale — if you wait until after you have accepted an offer to apply, the delay can jeopardize your closing date. Ideally, you should begin the Section 116 process as soon as you decide to sell, even before the property is listed.

The Twenty-Five Percent Withholding Tax

If a Section 116 certificate is not in the buyer's hands by the time of closing, the buyer's lawyer is legally required to withhold twenty-five percent of the gross sale price — not twenty-five percent of the profit, but twenty-five percent of the entire price. On a three-hundred-thousand-dollar Winnipeg property, that means seventy-five thousand dollars is held back and remitted to the CRA. The buyer faces penalties if they fail to withhold, which is why buyers and their lawyers take this requirement very seriously.

The withheld amount is applied against your actual tax liability. When you file your Canadian tax return for the year of sale, you claim the withholding as taxes paid. If the withholding exceeds your actual tax owing — which it often does, since capital gains tax is calculated on the profit, not the gross price — you receive a refund. However, getting that refund can take months, which means a significant portion of your sale proceeds is tied up with the CRA for an extended period.

The Canada Revenue Agency provides detailed guidance on non-resident property dispositions, including Form T2062 and instructions for applying for a Section 116 certificate. Starting the process early is the single most important step to ensuring a smooth closing.

Working With a Cash Buyer as a Non-Resident

Selling property from abroad adds logistical challenges beyond the tax requirements. Listing on the MLS requires a local realtor to manage showings, coordinate repairs, and handle offers — all while you are in a different time zone. Communication delays, currency considerations, and the inability to physically inspect or maintain the property can make a traditional sale frustrating and drawn out.

A cash buyer like SellMyHomeCash.ca simplifies the process significantly. We handle everything locally in Winnipeg — the property evaluation, the paperwork, and the coordination with your lawyer. You do not need to fly to Canada for the closing; your lawyer can manage the transaction remotely using executed documents. We understand the Section 116 requirements and can structure the closing timeline to accommodate the CRA certificate process. Call us at (204) 800-6640 to discuss your property, regardless of where you are currently located.

Tax Planning Tips for Non-Resident Sellers

For a complete understanding of the selling process, our guide on what happens after accepting a cash offer explains every step from agreement to closing, including how funds are disbursed through the lawyer's trust account.