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Non-resident sale of Canadian / Quebec real estate

I have recently assisted a non-resident vendor of Canadian / Quebec real estate. 

The law states that a non-resident vendor of real estate situated in Quebec must inform the Canadian and Quebec governments of the sale of real estate within 10 days of the sale.

The purchaser of the property (usually via the notary closing the sale) is required to withhold non-resident taxes of 25% (federal) and 12% (Quebec) of the gross proceeds of sale.

However to reduce the withholding of non-resident taxes, the non-resident owner can file requests (within 10 days of the sale) to the CRA and Revenue Quebec. If approved, the forms enable the non-resident taxes withheld to be limited to slightly more than the actual tax on the gain realized on the sale. 

After their review of the non-resident's forms, the CRA and Revenue Quebec issue "Certificates of Compliance".   These certificates allow the purchaser to reduce the tax withholdings on the sale. 

Generally the notary will issue cheques from their trust account holding the sale proceeds to cover the amounts owing calculated on the certificate requests.

Once the non-resident tax are withholdings are remitted, the notary will generally distribute the remainder of the proceeds to the non-resident seller.

Note that this process describes the withholding taxes only. The actual income tax liability is determined by filing Canadian and Quebec tax returns by April 30 of the year following the sale.

Contact me directly if you require assistance with the sale of real estate located in Canada.

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