Foreign Owner Selling InformationNon Residents are responsible to get a clearance certificate from the Canada Revenue Agency and to pay capital gains.
Clearance Certificate
You will need a Clearance Certificate from Revenue Canada prior to the completion date of your sale. Your lawyer or accountant can handle this for you. You need to have an accepted offer on your property to apply for a Clearance Certificate. Processing time can take up to 10 or 12 weeks.
Calculating Capital Gain
You should work with a lawyer to determine the adjusted cost base in order to calculate capital gain. 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. Revenue Canada allows the following:
- Property Transfer Tax
- Legal fees and disbursements associated with the purchase
- Furnishings and renovations included in the selling price
- GST
- A portion of the interest on mortgage payments
Revenue Canada does not allow any deductions from the selling price in determining the gain, and the rate of the Capital Gain Tax is 33.33% of the gain. However, by filing a Canadian tax return with Revenue Canada after the sale, some of the tax paid may be recovered.
