Disposition of taxable Canadian property - what are the tax withholdings for a non-resident sale of Quebec real estate?

Disposition of Taxable Canadian Property: Non-resident sale of Quebec real estate

  • A non-resident vendor of real estate situated in Quebec must inform the Canadian and Quebec governments of the sale of real estate within 10 days of the sale.
  • The purchaser of the property (usually via the notary in charge of closing the sale transaction) is required to withhold non-resident taxes of 25% (federal) and 12% (Quebec) of the gross proceeds of sale.
  • To reduce the withholding of non-resident taxes, the non-resident owner can file forms within 10 days of the sale with both the CRA and Revenue Quebec, together with evidence regarding the sale proceeds and the adjusted cost base of the property. If approved, the forms enable the non-resident taxes withheld to be limited to the tax on the actual gain realized on the sale.
  • After their review of the non-resident's forms, the CRA and Revenue Quebec will issue a Certificate of Compliance. This Certificate permits the purchaser to reduce the taxes withheld on the sale. Generally the notary will issue cheques from their trust account holding the sale proceeds to cover the amounts owing calculated on the certificate requests.
  • Once the non-resident taxes are paid, the notary will generally distribute the remainder of the proceeds to the non-resident vendor.

Note that this process describes the withholding taxes only. The actual income tax liability is determined by filing Canadian and Quebec tax returns by April 30 of the following year.

Contact us directly if you require assistance with the sale of real estate located in Quebec.

Resources:

ITA section 116

CRA form T2062 and T2063

Revenue Quebec form TP1097


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