What are the Canadian tax rules when a non-resident sells real property in Ontario?

When a non-resident sells real property in Ontario, the federal Income Tax Act requires the buyer to withhold a portion of the purchase price and remit it to CRA unless the seller has a clearance certificate. The withholding is typically 25% of the gross proceeds (or a higher rate if the property was depreciable). The buyer is personally liable if they pay the full price without proper withholding and no certificate exists — this is one of the most common traps in Ontario real estate transactions involving non-residents.

As the seller, you should apply for the clearance certificate (Form T2062 or T2062A) before or shortly after closing. CRA reviews the proposed gain, assesses any tax owing, and issues the certificate once the tax is paid or secured. The certificate releases you from Canadian withholding obligations on those proceeds.

After the transaction, you must also file a Canadian non-resident tax return and report the capital gain. If the withholding was more than the actual tax owing, you receive a refund. Tax treaties with some countries reduce the Canadian tax rate on gains.