Non-residents face some unique challenges and complex tax rules when selling a property in Canada. Here are two common challenges:
1. Withholding tax : Non-tax residents must pay withholding tax when selling a house, which is usually 25% of the house price. This fee must be paid before the transaction is completed and usually needs to be completed in a very short time, which is a huge financial pressure for the seller.
2. Apply for a tax clearance certificate : Before selling a house, non-tax residents must apply for a tax clearance certificate from the Canada Revenue Agency to prove that the relevant taxes have been paid or will be paid in accordance with regulations. This process is complicated and time-consuming, and requires a lot of documents and supporting materials.
To solve the above problems, we need to:
1. Prepare relevant documents and materials in advance , including proof of house purchase, house value assessment report, sales contract, etc. Work with a professional tax advisor or lawyer to ensure that all necessary documents are prepared before selling the property, so as to speed up the process of applying for a tax clearance certificate.
2. Hire a professional consultant. During the process of selling your home, hire an experienced tax consultant or lawyer to assist with withholding tax and tax clearance certificate applications. They can provide professional advice and help to ensure that all necessary steps are completed within the specified time, reducing financial and time pressures.
By preparing ahead of time and hiring a professional advisor, non-residents can more smoothly complete the sale of their property in Canada, ensuring that all tax regulations are followed and associated difficulties are resolved efficiently.
When a non-resident sells a personal investment property in Canada:
The lawyer will first need to withhold 25% of the property's sales price, and within 10 days after the property is handed over, apply to the tax bureau through an accountant for a certificate of compliance to review the net income generated after the sale of the property. Once approved, the lawyer will return the remaining portion of the withheld amount. If you have more than one property to deal with, you need to submit separate tax clearance applications.
But this does not mean that the tax bureau treats non-tax residents as easy prey.
Considering that there will be expenses such as lawyer fees after the property is handed over, the seller can report the fees to the tax bureau again before April 30 of the second year after the property is handed over and sold, further reducing the net income and obtaining a tax refund. However, the application takes time, and the tax clearance certificate takes at least three months. In addition to various audits and calculations, the entire process from selling the house to finally obtaining a tax refund is conservatively estimated to take at least one and a half years.
If you do not submit the application according to the rules for the sake of saving trouble, you will be fined $25 per day, starting at $100, and up to $2,500 per year. At the same time, according to tax laws, if you buy a house from a non-tax resident without a tax clearance certificate, the buyer will bear all possible taxes. In other words, without a tax clearance certificate, generally no one will dare to take over your property.
Indeed, due to its large size, the system may appear clumsy in operation . But each step has its own meaning, and is intended to serve more ordinary people more fairly and justly, and is finalized after discussions among all parties.
If we step out of the victim's perspective and change our way of thinking, it is not difficult to find that following the rules step by step, although it may seem like a detour, is actually the most time-saving, labor-saving and cost-saving way.
We recommend that you consult professionals to understand the rules and steps and maximize your benefits in the most worry-free way. If you need anything, please feel free to contact us. We are willing to be your good helper!
How can we help you?
As a professional service organization, Golden Key Business Development Center can provide you with a full range of support and services:
✅ Consulting service : Our team of experts will explain Canadian tax laws in detail to help you understand all tax obligations in the process of selling a house.
✅ Document preparation : We will assist you in preparing all necessary documents, including application for tax clearance certificate and withholding tax related documents, to ensure a smooth process.
✅ Tax optimization : Through professional tax planning, we help you minimize your tax burden and ensure that your interests are maximized.
✅ Filing service : After selling the house, we will continue to provide you with tax filing services to ensure that all tax filing processes are legal and compliant.
Choose Golden Key Business Development Center, you will get professional, fast and reliable services, making your real estate transaction process smoother and more efficient. Contact us to start your worry-free home selling journey!
What are the benefits of having us help you with your real estate transaction?
🤝Save time and energy
From document preparation, tax declaration to final transaction completion, we take care of the entire process for you, so you don’t have to worry about complicated processes and tedious formalities, saving valuable time and energy.
👏Tax optimization
Ensure that you minimize your tax burden and maximize your profits while complying with regulations.
🔰Risk Aversion:
Ensure the accuracy of all documents and declarations, helping you avoid fines and legal risks due to non-compliance.
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✅ Industry expertise
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