Non-Residents Selling Canadian Property: The Clearance Certificate

The section 116 clearance certificate (T2062), withholding and timing

Scott Tang, CPAUpdated 2026-11-052026 rules4 min read

When a non-resident sells a home in Canada, the buyer's lawyer will usually hold back a large part of the sale price (commonly 25% of the price; for the building portion of a rental property, it may be 50%) until the seller obtains a clearance certificate from the CRA (a section 116 certificate). So when a non-resident sells, the tax steps need to run alongside the real estate transaction; otherwise the sale proceeds may be held back for several months. The federal budget of November 5, 2026 proposes lowering these two rates to 15% and 30% for sales on or after January 1, 2027; this only takes effect once the legislation is passed.

T2062

The form the seller uses to request a clearance certificate from the CRA

10 days

The CRA generally has to be notified within 10 days after the sale (you can also apply before selling)

25%

Without a clearance certificate, the buyer generally has to withhold 25% of the price (50% for certain property); the budget proposes 15% (30%) from January 1, 2027 (not yet law)

April 30 of the next year

You also file a non-resident return for the year of the sale to settle the final tax

The process in outline

1
Before selling
Estimate the gain and prepare the T2062
2
The sale
The lawyer holds back part of the price as required
3
Within 10 days
File the T2062 with the CRA and prepay tax on the gain, or provide security
4
CRA issues certificate
The lawyer releases the funds based on the certificate
5
Next year's return
File a non-resident return; get a refund or pay the balance

How much is held back, and when you get it back

Without a clearance certificate

The buyer's lawyer holds back part of the price as required

The buyer generally has to remit it to the CRA within 30 days after the end of the month in which the property was acquired, and can't wait indefinitely for the certificate

The seller settles up when filing the next year's return

The holdback is a percentage of the price, not of the gain, and is often far more than the actual tax

With a clearance certificate

The seller prepays 25% of the gain (or provides security)

The CRA issues the section 116 certificate

The lawyer releases the rest of the funds

The certificate sometimes takes several months; the lawyer usually holds the funds until it arrives

Documents to prepare

Document	What it's for
Purchase agreement, lawyer's statement of adjustments	—Establish the original cost and purchase expenses
Invoices for renovations and improvements	—Add to the cost, reducing the gain
T776 forms and section 216 returns from the rental years	—Establish depreciation claimed and recapture
Principal residence years	—Years you lived in it while resident can be exempt
Sale agreement, real estate commission	—Establish the sale price and selling expenses
Departure date and how the home was treated when you left	—Establish which years you were resident and how the cost is set

Purchase agreement, lawyer's statement of adjustments

📄 What it's for: —Establish the original cost and purchase expenses

Invoices for renovations and improvements

📄 What it's for: —Add to the cost, reducing the gain

T776 forms and section 216 returns from the rental years

📄 What it's for: —Establish depreciation claimed and recapture

Principal residence years

📄 What it's for: —Years you lived in it while resident can be exempt

Sale agreement, real estate commission

📄 What it's for: —Establish the sale price and selling expenses

Departure date and how the home was treated when you left

📄 What it's for: —Establish which years you were resident and how the cost is set

Points to watch

The earlier the better
Prepare the T2062 and your documents before you sell, and agree a timetable with your lawyer and real estate agent, to shorten the time your money is held back.
The building portion of a rental property
The building is depreciable property, so the withholding rate and the forms (such as the T2062A) depend first on the nature of the property, regardless of whether you claimed depreciation; if you did claim it, you also report the recapture.
You still file after the sale
Getting the clearance certificate isn't the end: you file a non-resident return for the year of the sale to settle the final tax and any refund.
The principal residence portion
Years you lived in the home while resident can be exempt; years after you left generally can't. The calculation has to match how the home was treated when you left.

How Sheng Qian CPA can help

Calculations before you sell
Based on the cost, depreciation and principal residence years, we work out the gain and the expected tax.
Clearance certificate, coordinated with your lawyer
We prepare the T2062, follow up with the CRA and coordinate the timing of the release of funds with your real estate lawyer.
Filing after the sale
The non-resident return for the year of the sale, claiming back any excess withheld. For prices, see "What Sheng Qian CPA Can Do for Newcomers and People Leaving Canada: Support on Arrival and on Departure" in this series.

Sources

CRA: Disposing of or acquiring certain Canadian property (Section 116) · Form T2062
Income Tax Act: section 116
CRA: IC72-17R6 Procedures concerning the disposition of taxable Canadian property by non-residents

Disclaimer

This article is general information only and is not tax or legal advice. Everyone's situation is different; please consult a CPA and a real estate lawyer about your specific arrangements. Service fees are as set out in our written quote.