Non-Resident Seller in Vancouver?
So, you’re selling your home and your realtor mentions a Clearance Certificate. You decide to look it up on-line to figure out what it’s for and what it means for you. But all you find is confusing articles by the government. That’s where we come in. I want to make this process as simple and understandable as possible.
Let’s start with what it is. A Clearance Certificate applies to non-resident Canadians who are wishing to sell their Vancouver property. This also applies to non-resident Canadians who are part owners of a property or in a joint venture. It shows to the buyers/new owners that the appropriate amount of tax has been remitted from the property, and that the sale of the property can be transferred. Properties that require a Clearance Certificate include:
- Real property located in Canada
- Canadian life insurance policies
- Resource-based properties
Now you know the basics of what a Clearance Certificate is, and what property it applies to. We can now jump into when you’ll be needing one, and the potential holdbacks that may come with it.
When do you need a Clearance Certificate?
Well, as stated above, you’ll need one whenever you, a non-resident of Canada, are in the process of selling property in Vancouver. Within 10 days of the sale, the Clearance Certificate must be in to the Canada Revenue Agency (CRA). Generally, sellers acquire their Clearance Certificates before the sales completion date, this limits the risk of it not showing up in time after the sale. It can take 10-12 weeks to get a Clearance Certificate.
If the appropriate paper work isn’t filed with the sale of the home, the purchaser may be forced to withhold up to 50% of the amount the property sold for. Often, your real estate lawyer will withhold 25% of sales proceeds until the Clearance Certificate is complete.
Forms required for selling in Vancouver
To get your hands on a Clearance certificate you will have to fill out whichever one of the following forms is the most applicable to you.
- Form T2062 – Request by a Non-Resident of Canada for a Certificate of Complicate Related to the Disposition of Taxable Canadian Property
- Form T2062A – Request by a Non-Resident of Canada for a Certificate of Complicate Related to the Disposition of Real Canadian Property: Canadian Resources and Timber Resource Property or Depreciable Taxable Canadian Property
- Form T2062B – Notice of Disposition of Life Insurance Policy in Canada by a Non-Resident of Canada
These forms require lots of numbers and calculations, I find it is best to work with an accountant to avoid and unnecessary errors.
When filling out these forms, it is important to include your Tax Number. This can come in 2 different ways,
- A Social Insurance Number (SIN), if you were previously a resident of Canada
- Forgot it? Say that, along with your last known address outside of Canada, date of birth and full legal name
- A Temporary Tax Number
If you have neither of these, you will then have to fill out form T1261. With this you are applying for a CRA Individual Tax Number (ITN) for non-residents.
Done with all the forms?
You’ve gone through all the steps above, now you have to send your forms somewhere. You can send your forms to the nearest Tax Services Office to you. Once It has all gone through, you will receive your Clearance Certificate.
Congratulations, you can now sell your home without worry!
If you are looking to sell your Vancouver property contact your Top Vancouver Realtor, Leo Wilk, anytime!