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New 5 star luxury gated development in a prime location in Hurghada city centre.
Apartments from only £19,964 to £60,000 Easy Payment Plan More »
Buying Property in Canada
Selling Property in Canada
When
a non-resident sells Canadian real estate, he/she is required
to pay the appropriate amount of taxes on any capital gain.
The normal Canadian tax rates will be applied to 50% of the
gain. However, a non-resident is required to pay an estimate
of the tax before the sale, an amount equal to 25% of the gain.
This amount is to be retained by the seller's lawyer until such
time as a clearance certificate is received from the Canada
Revenue Agency (CRA) in connection with the sale of the property.
Upon payment, the CRA will issue a clearance certificate to the seller, but not until there has been a contract of purchase and sale with all subjects (conditions) removed. The wait for the certificate is usually 6-8 weeks. If the certificate is not obtained, the purchaser is required to withhold from the sale proceeds, a percentage of the selling price (usually 25-50%).
On or before the closing date, the mortgage money is transferred to the seller's lawyer and then to the seller and the title is transferred to the buyer's name.
The non-resident seller should file a Canadian income tax return for the year in which the sale occurs and should expect to receive a refund of a portion of the taxes paid. The taxation of Canadian real estate depends on whether the use of the property is for a principal residence, an active business or as a rental property. If it is used as a rental property, a 25% non-resident tax must be paid on the gross rent a tenant pays.
However,
if you use a professional property manager, the manager will,
by law, withhold 25% of the gross rental revenue at source to
be remitted to the Canada Revenue Agency. Then on or before
March 31 of the following year, the property manager issues
an NR4 form and you then have the right to file a Canadian tax
return. The tax return is due before June 30 and enables you
to claim expenses against that income and potentially request
a refund.
Many countries, such as the U.S., have tax treaties with Canada that prevent you from being taxed in both Canada and your home country. It is advisable to contact a tax accountant in your country for more information.
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