As I deal consistently with non-resident investors intending to sell Canadian real estate properties, I wish to shed some light on this otherwise rather arcane subject. PLEASE NOTE: please note that the adhering to essay is presented only for general info purposes, it is not planned to be legal recommendations or supposed to be therefore, it could or may not apply to your certain scenario which I strongly suggest – actually I urge you – to review this topic in-depht better with your lawyer, notary, conveyancer or accountant – and not always in this sequence – if a requirement there be.
If you are a non-resident associated with the selling of Canadian realty properties that you own, you should be aware of the applicable arrangements of the Revenue Tax obligation Act to stay clear of issues when the moment comes for the sale to complete. Briefly, if tax obligations are owing to the Canada Traditions and also Income Company (Earnings Canada) by a homeowner, the home could be charged to safeguard settlement of superior taxes. This applies to both homeowners and non-residents. What, nonetheless, particularly applies in the case of non-residents offering Canadian realty is that the residential or commercial property might be charged even after being transferred to the new owner.
In order to be secured and according to the demand of the Earnings Tax Act, the Buyer should make a ‘practical inquiry’ regarding the Vendor’s residency standing. Therefore the requirement for indicating ‘Resident of Canada/Non- Homeowner of Canada’ under the Sellers information in the leading left section of the Contract of Purchase and also Sale. The Purchaser’s notary or legal representative will make a comparable questions of the Vendor when the convyancing documents are signed. If the Vendor is a non-resident of Canada, he must get and acquire a Clearance Certification from Earnings Canada and provide the Buyer with this Certification. It generally takes 4 to six weeks for Revenue Canada to issue a Clearance Certificate. If a Clearance Certificate is not given to the Purchaser or his conveyancing agent, then the Purchaser has to hold back one-third of the list price up until the Certification is supplied. If the Certification, additionally, is not upcoming the holdback cash is after that paid to Revenue Canada and also the Purchaser – and the freshly gotten property – are shielded from any type of additional liability or fee.
A trouble, furthermore, might occur at the time of conclusion if, as an example, the existing home mortgage surpasses two-thirds of the list price and also there are therefore no enough proceeds to permit the holdback and also clear title, and also payment of shutting expenses. So for that reason, if you are (or will certainly be at the moment of conclusion) a non-resident Vendor make sure to elevate this problem before the residential property is sold and also there is still time to obtain the called for Clearance Certificate. Similarly, if you are the Purchaser and you learn that the Seller is a non-resident, be sure there is enough time before conclusion and also property. Click here to find out more: Lorin Mclachlan