Selling Property in Canada as a Non-Resident: The 25% Withholding
Selling property in Canada as a non-resident works differently from selling as a resident, and the difference is brutal on cash flow. The buyer is entitled to hold back 25% of the gross sale price — not 25% of your profit — unless you have a certificate of compliance from the Canada Revenue Agency. On an $800,000 sale that is $200,000 withheld against a tax bill that may be closer to $20,000.
When a non-resident disposes of taxable Canadian property, the CRA must be notified within 10 days using Form T2062. Until a certificate of compliance (Form T2064 or T2068) is issued, the purchaser can withhold 25% of the proceeds — 50% on certain property types — because they can otherwise be held liable for the seller’s tax. You recover the excess by filing a Canadian tax return, due April 30 of the following year for individuals, with Copy 2 of the certificate attached.
| Non-resident property sale in Canada | The rule |
|---|---|
| Notify the CRA | Within 10 days of the disposition (Form T2062) |
| Late notification penalty | $25 per day, minimum $100, maximum $2,500 |
| Purchaser withholding without a certificate | 25% of gross proceeds (50% on certain property) |
| Certificate of compliance | T2064 (proposed sale) or T2068 (completed sale) |
| What the withholding is based on | The sale price — not the gain |
| Tax return deadline, individuals | April 30 of the following year, Copy 2 of the certificate attached |
| Corporations / trusts | 6 months after fiscal year end / 90 days after trust year end |
| Taxable portion of the gain | 50%, as for residents |
| Can the certificate be refused? | Yes — unmet Underused Housing Tax obligations |
Source: Canada Revenue Agency, Disposing of or acquiring certain Canadian property. Verified August 2026.
Why 25% of the price is so much more than the tax
The withholding on a non-resident property sale in Canada is a security deposit against the seller’s tax, not the tax itself. It is calculated on gross proceeds, while the tax is calculated on the gain — and half of the gain at that. Consider a non-resident selling a Canadian property for $800,000 that they bought for $600,000, with $40,000 of legal and real estate commission costs:
| Amount | |
|---|---|
| Sale price | $800,000 |
| Adjusted cost base | $600,000 |
| Selling costs | $40,000 |
| Capital gain | $160,000 |
| Taxable capital gain (50%) | $80,000 |
| Approximate tax on the gain (illustrative) | ~$20,000 |
| Buyer holdback without a certificate (25% of price) | $200,000 |
The holdback is roughly ten times the actual tax, leaving about $180,000 of the seller’s own money frozen until the paperwork catches up. The tax figure above is illustrative only — the real amount depends on the seller’s other Canadian income and circumstances — but the shape of the gap does not change. This is why the certificate of compliance process matters so much: it is the mechanism that reduces the holdback to something close to the real liability.
Your gain is only as accurate as your cost base, so the numbers behind that calculation are worth getting right; our guide to how to calculate adjusted cost base covers what counts, and you can model the tax on a gain with our capital gains tax calculator.
The 10-day rule and the certificate of compliance
The paperwork side of selling property in Canada as a non-resident runs on a very short clock, and it starts at closing rather than at tax time.
The CRA requires a non-resident vendor to notify it of a disposition within 10 days of the date the property was disposed of, using the applicable form:
- Form T2062 — taxable Canadian property generally
- Form T2062A — Canadian resource or timber resource property, Canadian real property that is not capital property, or depreciable taxable Canadian property
- Form T2062B — a life insurance policy in Canada
You can also notify the CRA of a proposed disposition before closing, which is what experienced cross-border sellers do. Either way, once you provide payment covering the resulting tax or acceptable security, the CRA issues a certificate of compliance: Form T2064 for a proposed disposition, Form T2068 for one that has already happened.
A non-resident vendor who fails to notify the CRA within 10 days is liable to a penalty of $25 per day, with a minimum of $100 and a maximum of $2,500. The larger cost is usually indirect: with no certificate issued, the purchaser stays exposed to the seller’s tax liability and is entitled to keep withholding 25% of the proceeds. In practice lawyers hold that money in trust, sometimes for many months, until the CRA responds.
Two practical points that save weeks. If you need an Individual Tax Number, the CRA asks that you apply for it separately from the disposition request, because bundling them causes delays. And missing supporting documentation is the most common reason a certificate stalls, so send the complete package the first time.
The Underused Housing Tax trap
This is the newest way a non-resident property sale in Canada goes wrong, and it catches owners who have never heard of the tax involved. Subsection 116(8) of the Income Tax Act allows the CRA to refuse to issue a certificate of compliance where a non-resident, non-Canadian owner has not met their filing and payment obligations under the Underused Housing Tax Act.
The trap has a sharp edge: an affected owner must file a UHT return for the residential property even if they qualify for an exemption from paying the tax. Owners who assumed an exemption meant nothing to file can arrive at closing to find the certificate blocked, the buyer’s 25% holdback locked in place, and years of outstanding returns to deal with first.
If you are a non-resident who owns Canadian residential property, check your UHT filing history well before you list, not after you accept an offer.
See the taxable portion and the tax on a Canadian property gain by province.
What counts as taxable Canadian property
The rules reach further than a house. For dispositions after March 4, 2010, taxable Canadian property generally includes real or immovable property situated in Canada, property used or held in a business carried on in Canada, and — the part that surprises people — shares and partnership or trust interests whose value comes mainly from Canadian real estate.
Specifically, shares of corporations not listed on a designated stock exchange, and interests in partnerships or trusts, are taxable Canadian property if at any time in the previous 60 months more than 50% of their fair market value was derived from Canadian real or immovable property, Canadian resource property, or timber resource property. For listed shares and mutual fund units, a further test applies where the taxpayer and non-arm’s-length persons held 25% or more of a class.
The 60-month look-back matters: a corporation can fail this test on history even if its balance sheet looks different on the day of sale. Some property is excluded, including securities listed on a recognized stock exchange and inventory of a business carried on in Canada other than Canadian real property. The CRA sets out the full section 116 procedure in Information Circular IC72-17R6.
Getting your money back: the tax return
The withholding is not the end of the story, it is an instalment. After disposing of taxable Canadian property you generally have to file a Canadian income tax return, and that return is where the real tax is calculated and the excess refunded.
- Non-resident individuals file by April 30 of the year following the disposition, attaching Copy 2 of the Certificate of Compliance.
- Non-resident corporations file within six months after the end of the taxation year in which the disposition took place.
- Non-resident trusts file within 90 days after the end of the trust’s taxation year.
There are narrow circumstances in which a return is not required — broadly, where no tax is payable for the year of disposition, nothing is owed for prior years, and the properties disposed of meet the CRA’s conditions. If any tax is payable, or you want the withheld money back, you file.
One thing worth saying plainly: a Canadian principal residence exemption is a resident’s tool. If the property was your principal residence for years when you actually lived in Canada, those years can still shelter part of the gain, but a property held while you were a non-resident throughout does not get that treatment. The mechanics of designation are covered in our guide to capital gains tax on selling property in Canada.
How this fits with the rest of the non-resident rules
Selling property in Canada as a non-resident sits inside a wider set of cross-border rules, and two of them decide how this one applies to you.
Section 116 governs the sale itself.
First, whether you are a non-resident is itself a factual test based on residential ties, not on where you happen to live — see how to become a non-resident of Canada for tax purposes. Someone who left Canada but kept a home and family here may still be a Canadian tax resident, in which case none of this withholding machinery applies.
Second, buying and selling are taxed at opposite ends by different rules. Ontario’s non-resident speculation tax hits foreign buyers on purchase at 25% of the price, and it turns on immigration status rather than tax residency — so it is entirely possible to pay NRST going in and section 116 withholding coming out, under two different definitions of “non-resident”. If you also earn rent from the property, a separate election governs how that income is taxed. Our other tools are in the free financial calculators hub.
Frequently asked questions
The tax is calculated on the capital gain, of which 50% is taxable, the same as for residents. The 25% figure people encounter is not the tax — it is the amount the purchaser can withhold from the gross sale price as security until a certificate of compliance is issued. The excess is refunded when you file your Canadian tax return.
It is the CRA’s confirmation that the tax on a non-resident’s disposition of taxable Canadian property has been paid or secured. Form T2064 covers a proposed disposition and Form T2068 a completed one. Without it, the purchaser can be held liable for the seller’s tax and is entitled to withhold 25% of the proceeds.
Ten days from the date of disposition. Filing late triggers a penalty of $25 per day, with a minimum of $100 and a maximum of $2,500. You can also notify the CRA of a proposed disposition before closing, which is generally faster and less disruptive.
On the gross sale price. That is why the holdback is often many times the actual tax owing: the tax applies to half of the capital gain, while the withholding applies to the entire proceeds. Obtaining a certificate of compliance is what reduces the amount held back.
Yes. Under subsection 116(8), the CRA may refuse to issue a certificate where a non-resident, non-Canadian owner has not met their filing and payment obligations under the Underused Housing Tax Act. Affected owners must file a UHT return even when they qualify for an exemption from the tax.
Non-resident individuals file by April 30 of the year following the disposition and must attach Copy 2 of the Certificate of Compliance. Corporations file within six months of their fiscal year end, and trusts within 90 days of the trust’s year end.
Last updated: August 2026. Rules verified against Canada Revenue Agency guidance.
This article is general information, not tax or legal advice. Section 116 procedures, withholding rates on particular property types, treaty relief, Underused Housing Tax obligations, and the availability of any principal residence exemption depend on your specific facts. Deadlines are short and penalties accrue daily. Engage a Canadian real estate lawyer and a cross-border tax professional before closing, not after.
