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Home  ->  Real Estate -> Buying real estate from a non-resident / renting from a non-resident

Buying Real Estate From a Non-Resident

Income Tax Act s. 116

When real estate is purchased from a non-resident of Canada, the non-resident is normally required to complete and submit a form to Canada Revenue Agency (CRA), along with a tax of 25% of the gain on the property.  CRA will then provide a certificate of compliance (T2064 or T2068) to the purchaser and the vendor.  

Purchaser Liable if Non-Resident Does Not Pay

If the non-resident vendor does not pay this tax, the purchaser of the property will be liable.  Thus, the purchaser may withhold 25% (50% in some cases) of the cost of the property.

In a recent BC Supreme Court Case, Mao v. Liu, 2017 BCSC 226, Tony Liu Notary Corporation was sued by Mao.  Mao had been assessed $600,000 by CRA related to the sale, because the seller was a non-resident of Canada.  The Notary had handled the closing of the sale and failed to discover that the seller was a non-resident.  Thus, the 25% tax was not remitted by the vendors.  The Court found in favour of Mao.

Several factors made it seem, without doing sufficient investigation, that the vendors were residents of Canada:

bulletThe vendors had owned the property for 12 years;
bullettheir registered address was the address of the property; and
bulletthere was a history of mortgages against the property in favour of financial institutions in Canada.

When you're buying real estate, or are the agent for the purchaser, get verification that will stand up in Court that the vendor is a resident in Canada, unless it is already known that the vendor is a non-resident.

Renting Real Estate From a Non-Resident

Income Tax Act s. 212(1), s. 215(1)

A tenant is required to withhold 25% tax on rent paid to a non-resident landlord. See the Video Tax News June 2023 Life in the Tax Lane, as well as court case 3792391 Canada Inc. v. The King.

Canada Revenue Agency Resources

The above tax applies to some other types of Canadian property besides real estate.  For more information on this topic, see Canada Revenue Agency resources:

T4058 Non-Residents and Income Tax

Non-residents disposing of certain Canadian properties

IC72-17R6 Procedures Concerning the Disposition of Taxable Canadian Property by Non-Residents of Canada - Section 116

Purchasing Residential Real Estate in BC

If you're planning to purchase residential real estate in BC, see these articles as well:

BC Property Taxes

BC Speculation and Vacancy Tax

If you're planning to purchase property in BC on which you plan to develop a farm, see:

Farm Status in British Columbia - Understanding the Regulation

Tax Tips:

Know the tax implications when buying from a non-resident.

Make sure you know whether the vendor is or is not a non-resident!

Revised: October 26, 2023


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