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Buying real estate from non-residents

If the seller doesn’t get a clearance certificate, the responsibility shifts to you, the purchaser, to remit either 50% of the purchase price for depreciable property, or 25% of the purchase price for other capital property.

Section 116 of the Income Tax Act requires payment of withholding tax when a non-resident disposes of taxable property. And it’s important that he or she obtain a clearance certificate from the CRA. It certifies that the seller has paid all taxes owing on the property.

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