Ask Allan Forum
Get expert answers to your tax questions straight from Allan, our owner and experienced CPA. It’s free, direct, and designed to help you make the best decisions when it comes to your taxes.
Hello,
I am a non-resident of Canada for tax purposes and I am about to sell my rental property in Canada, I've been told that up to 25% of the proceeds may be withheld until certificate of compliance is obtained, but I've also read that Treaty protected property is exempt. I currently reside in USA.
According to the Canada-US tax treaty, gains from the sale of real estate are first taxable in the country where the real estate is located. As such, Canada has the right to tax the gains from the sale of your Canadian rental property. Your lawyer will hold-back 25% of the sales proceeds, until you provide him/her with an approved Clearance Certificate from the CRA. Upon receipt of the Clearance Certificate, your lawyer will release the hold-back. Please let me know if you need my help to prepare an Application for a Certificate of Compliance (i.e. clearance certificate).