If you're a non-resident selling Canadian real estate, the CRA's 25% withholding rule means a 30-day closing is virtually impossible. Here's the full timeline.
Why 30-Day Closings Don't Work for Non-Resident Sellers
Thirty-day closings are standard for resident sellers. For non-residents, they’re a recipe for problems:
- Certificate has zero chance of arriving — 12–16 weeks vs 30 days
- Buyer’s lawyer will absolutely hold back 25% — no discretion here
- Seller can’t access full sale proceeds — on a $1M sale, $250K is frozen in trust for 6+ months
- The buyer may not love it either — extra trust management and legal complexity
60–90 day closings give everyone breathing room:
- Small chance the Certificate arrives before closing (rare, but possible)
- Even if not, the seller receives 75% in cash on closing
- Buyer gets more time for financing and move planning
The #1 misconception is ‘I’m selling to a local Chinese-Canadian buyer, so it should be fine.’ Section 116 is a federal rule — buyer identity doesn’t matter. Every buyer’s lawyer applies the same withholding. Start your Certificate application 4–6 weeks before listing. It’s the only real fix.
Complete Document Checklist for Section 116
- Form T2062 (residential) or T2062A (rental)
- Original APS + purchase lawyer’s statement of adjustments (proves cost base)
- All capital improvement invoices (added to cost base, reduces capital gain)
- Property tax bills for all years owned
- Current sale APS + listing agreement
- Seller’s ID and PR/visa status + SIN or ITN
- Power of attorney if you’re outside Canada
ℹ️Apply for ITN early: If you’ve never worked in Canada, you likely don’t have a SIN. You’ll need an Individual Tax Number via form T1261 — 4–8 weeks. So non-resident sellers should start ITN applications before listing.
How to Minimize Trust Holdback Time
Start Certificate Prep 4–6 Weeks Before Listing
Push for 75–90 Day Closings in the APS
Choose a Lawyer Who Handles Non-Resident Files Regularly
Keep Every Capital Improvement Receipt
Capital Gain Math (Simplified)
Capital Gain = Sale Price − Adjusted Cost Base − Selling Costs
Adjusted Cost Base = Original Purchase + Capital Improvements + Original Legal Fees
Selling Costs = Commission + Lawyer + Staging
Inclusion Rate (2026): 50% on first $250K of gain / 66.67% on portion above $250K
Tax = Inclusion × marginal rate (federal + provincial, ~25–30% for typical non-resident)
Example: bought $800K, $50K capital improvements, sold $1.3M, $70K selling costs:
- Capital Gain = $1.3M − ($800K + $50K) − $70K = $380K
- Inclusion = $250K × 50% + $130K × 66.67% ≈ $211.7K
- Tax ≈ $53–63K total
- Withholding = $1.3M × 25% = $325K (clearly over-withheld by ~$260K, refunded after T1 filing)
⚠️2026 inclusion rate change: Starting June 2024, capital gains over $250K have a 66.67% inclusion rate (up from 50%). Final rules per CRA. Non-resident sellers feel this more than residents because the threshold applies per disposition.
Top 5 Questions From Non-Resident Sellers
Q.I hold a Canadian PR but live abroad — am I still non-resident?
A.It’s tax residency, not immigration status. CRA looks at days in Canada (183-day rule), residential ties (home, spouse, dependents, bank accounts), and intent. You can hold PR and still be a non-resident for tax purposes. If unclear, file form NR73 with a Canadian accountant 6+ months ahead — it gives you a written determination.
Q.Can I apply for the Certificate after closing?
A.Yes, but the buyer’s lawyer holds 25% in trust meantime. That money earns no interest, sits idle for 6–12 months. Better to file before listing.
Q.What happens if the buyer doesn't know I'm non-resident?
A.The buyer’s lawyer runs a statutory declaration before closing — sellers must sign attesting to residency status. False declarations expose the seller to fraud claims. CRA can also pursue both buyer and seller. Disclose upfront, always.
Q.If I move back to Canada before closing, do I still owe 25%?
A.Probably yes. The test is residency on closing day. Unless you’ve moved back 6+ months earlier with full residential ties re-established, and ideally received CRA confirmation in writing, you’ll be treated as non-resident.
Q.What if I'm selling at a loss — do I still owe 25%?
A.Technically yes, but you can apply for reduced withholding under Section 116(2) using the same T2062 form. If CRA accepts that the gain is zero or a loss, withholding can be eliminated. The processing time is still 12–16 weeks, so the timeline math doesn’t change.
Arthur Zhao
Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS
VP & Branch Manager, Bay Street Group Inc.
Have a question about your move? Let's talk.
Arthur Zhao
Real Estate Broker · FRI · ABR · SRS · PSA · MCNE · E-PRO · CLHMS & GUILD Elite · REAIS
VP & Branch Manager, Bay Street Group Inc.
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