Selling Property: Canada’s 25% Withholding Risk for Nonresidents

Last updated: October 16, 2026

You must notify CRA under section 116 before the sale or within 10 days after, and arrange payment or acceptable security so CRA can issue a certificate of compliance. Without one, the purchaser generally withholds 25% of the price, or 50% for certain property. The section 116 filing is a notice to CRA, not a return, and your final tax is set on your income tax return.

Key Takeaways

Selling Canadian property as a non-resident requires timely notification to CRA, proper documentation, and filing a final tax return to avoid withholding penalties.

Table of Contents

• Which forms do you file for selling property as a non-resident?
• How much is withheld, and why do purchasers insist on a certificate?
• What do you file after the sale?
• What changes if you earned rental income on the property?
• What are the penalties, and what is the short checklist?
• Why does early help from a tax professional matter?
• How can T-Ledgers handle your section 116 and post-sale filings?
• FAQ
• Sources

Which forms do you file for selling property as a non-resident?

The section 116 notice is due before the sale or within 10 days after. Start by classifying the property, because the form depends on it. CRA uses Form T2062 for taxable Canadian property. Form T2062A covers resource or timber resource property, Canadian real property that is not capital property, and depreciable taxable Canadian property. Using the wrong one slows everything down.

CRA’s section 116 procedures distinguish two situations. For a proposed disposition, CRA can issue Form T2064. For an actual disposition that has already closed, it can issue Form T2068. Filing at least 30 days before closing gives CRA time to respond before the purchaser’s lawyer needs the certificate.

Missing paperwork is the usual cause of delay, so gather these early:

• The purchase agreement, or the draft sale agreement for a proposed disposition
• The deed or other proof of how you hold title
• Corporate or trust documents, if a company or trust owns the property
• Your adjusted cost base calculation, with closing costs and capital improvements
• Your CRA file number and proof of your non-resident address

Pro Tip: Build your adjusted cost base worksheet before you file. CRA questions about your purchase price and improvements are the queries that most often stall a certificate.

How much is withheld, and why do purchasers insist on a certificate?

Without a certificate, the purchaser must withhold and remit 25% of the purchase price, and 50% applies to certain property. With a certificate, the remittance follows the certificate’s terms and whatever payment or security CRA accepts.

Here is how that works in practice:

• The amount held is security for possible tax, not necessarily your final tax.
• Your return later calculates the actual gain, and you may receive a refund or owe a balance.
• Payments or acceptable security you give CRA are interim and are credited when your return is assessed.
• If no certificate is issued, the purchaser can become responsible for remitting the required amount, which is why their lawyer will not close without one.

Closing and tax filing are separate events. Section 116 handles purchaser withholding at the time of sale, and your annual return settles the real number.

What do you file after the sale?

You report the sale on your Canadian income tax return, and the certificate is part of that filing. Follow these steps:

1. Complete the return for the year of sale and report the gain on Schedule 3, using the line that matches your property type.
2. Attach a copy of the certificate of compliance to the return.
3. File by April 30 of the year after the sale if you are an individual. Corporations and trusts have different deadlines.
4. Apply the payment or security you gave CRA at the notice stage. It is credited at assessment.
5. Pay any balance owing, or wait for the refund if the amount withheld exceeded your tax.

Our tax deadlines guide helps you line up these dates. If you are still confirming your status, read our piece on checking residency before you file.

What changes if you earned rental income on the property?

Rental history adds a second compliance track. By default, Part XIII withholding takes 25% of gross rent. Under section 216, an eligible non-resident can instead report net rental income. To have withholding applied to net rent, file Form NR6 before the first rental payment, following CRA’s section 216 guidance.

• A late section 216 return makes the election invalid and the 25% tax on gross rent final.
• Any balance owing under section 216 is due April 30 of the following year.
• Section 216 returns have no provincial tax, only federal tax plus the non-resident surtax, as the T4144 guide explains.
• If NR6 was approved, the ordinary filing deadline is June 30 of the following year.
• If you claimed capital cost allowance and the sale creates recapture, you must file a section 216 return whether or not you completed NR6.

Section 216 only works when it is filed on time. Tracking rental expenses cleanly all year supports the return, and a tool such as AI2Fin’s property expense tracking can keep rental costs separate from personal ones.

What are the penalties, and what is the short checklist?

If you miss the notice deadline, the failure-to-comply penalty is $25 per day, with a $100 minimum and a $2,500 maximum. CRA may consider taxpayer relief when the delay was beyond your control, but relief is not automatic. Our note on the consequences of not filing covers the wider picture.

• Get a CRA file number and choose the correct form.
• Assemble deeds, agreements, entity documents and your cost base.
• Notify CRA at least 30 days before closing where possible.
• Provide payment or acceptable security.
• Attach the certificate to your return.

Pro Tip: Send your documents in one complete package. Missing documentation can delay the certificate.

Why does early help from a tax professional matter?

In our experience as CPAs, the sales that close smoothly are the ones where the seller, the purchaser’s lawyer and the tax preparer talk before the listing goes firm. Most delays come from a missing document or an unclear ownership structure, and a professional can answer CRA’s queries without stalling closing. Payments to CRA are interim, and your final tax is determined on your assessed return, so a cautious security amount is not a lost cost.

— Wajahat Ajmal (CPA)

How can T-Ledgers handle your section 116 and post-sale filings?

Selling from abroad is easier when someone local handles the paperwork. Our CPA-led team works remotely, so you can manage everything from wherever you live. Ask us about the fee arrangement before engaging our services.

• We prepare your section 116 notice and request your certificate
• We file NR6 and section 216 returns when rental income is involved
• We complete your post-sale return and apply the certificate
• We deal with CRA queries before your closing date

Our personal tax service starts from $110 + HST/GST, and our Growth, Scale and Ultimate plans start at $350 per month. Contact us for a fixed-fee engagement, and we will take it from there before closing.

FAQ

What is the non-resident tax rate in Canada?

The default withholding on the sale of taxable Canadian property is 25% of the purchase price, or 50% for certain property, according to CRA. That amount is security, and your final tax is calculated on your return.

How long does it take CRA to process Form T2062?

CRA does not publish a fixed turnaround that applies in every case. Incomplete supporting documents are a common reason for delay, so file complete paperwork well before closing.

What is a non-resident owner?

A non-resident owner is someone who owns Canadian property but is not a resident of Canada for tax purposes. When you sell taxable Canadian property, the section 116 notice rules apply to you.

Do I need to file a Canadian return after selling?

Yes. The section 116 filing is only a notice, so you report the gain on your return. Attach copy 2 of your certificate when you file.

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This article is intended to inform readers in general terms. It is not intended to provide any tax or business advice. Please consult your T-Ledgers advisor if you have any questions about your unique situation. While we have tried to ensure the accuracy of the information in this article, we accept no liability for errors or omissions.