Non-Residential Sellers
Information for Non-Residential Sellers of Whistler Real Estate
Selling property in the Canada as a non-residential sellers can come with some unique challenges and considerations. For example, there may be tax implications that you need to be aware of, including withholding taxes that may apply to the sale of your property. It’s important to understand these issues and to seek professional advice from experienced attorneys and accountants who are familiar with the laws and regulations that apply to non-resident property sales.
Working with a real estate agent like Joe Battaglia, who has experience working with non-residential sellers, can also help you navigate the process and ensure that your sale goes smoothly. By being informed and seeking professional guidance, you can avoid any potential issues and maximize your return on investment.
In addition to tax implications, non-residential sellers may also encounter other issues related to the sale of their property. For example, they may need to obtain a Taxpayer Identification Number (TIN) from the IRS in order to complete the sale, or they may need to file certain forms to report the sale and pay any applicable taxes.
There may also be differences in the closing process or in the requirements for transferring funds from the sale. These issues can vary depending on the specific circumstances of the sale, so it’s important to work with experienced professionals who can help you navigate the process and ensure that you’re in compliance with all applicable laws and regulations.
Non-Residential Sellers Withholding Tax
As a non-residential sellers Canadian real estate, you will be required to remit capital gains tax. In general, this liability amounts to approximately 25% of your capital gain. Your gain is equal to the sale price minus your Adjusted Cost Base (ACB). Your lawyer is required to initially hold back 25% of the total sale proceeds while filing a Clearance Certificate (see below) on your behalf.
Once the certificate is received, processed and approved, your lawyer will release the remainder of funds owing to you (the difference between 25% of the total sale proceeds and 25% of your capital gain). Your lawyer will coordinate with an accountant regarding this filing and the costs are typically around $1000 to $1500 plus HST and disbursements.
Clearance Certificate
It is a condition for a sale of property by non resident who is selling real estate in Canada to obtain a Clearance Certificate from the Canada Revenue Agency (CRA). Prior to the Canada Revenue Agency issuing a Clearance Certificate they will want to collect any tax payable with respect to your property purchase and sale. This will include any tax payable on the rental income from the property which has not already been remitted, as well as tax on the capital gain experienced on the property and if applicable, recapture of capital cost allowance.
Delays in obtaining Clearance Certificates are often lengthy (up to 8 weeks). A seller should contact their lawyer or accountant to request a Clearance Certificate as soon as an offer to purchase the property has been accepted. If a sale completes before the Clearance Certificate is issued, a percentage of the selling price ranging from 25% to 50% will have to be held back from the seller’s proceeds until a Clearance Certificate is issued.
