CRA Form T2062: Non-Resident Sale of Canadian Property

1. What Form T2062 Does

Section 116 of the Income Tax Act establishes a special compliance and collection process when a non-resident disposes of certain taxable Canadian property (TCP). Canadian real or immovable property is generally TCP, but the exact section 116 treatment depends on the type of property and whether an exclusion or treaty rule applies. Form T2062 is the CRA notification and certificate-of-compliance request for an actual or proposed disposition of TCP covered by that form. The section 116 payment or acceptable security is an interim amount; the vendor's final Canadian tax liability is determined through the applicable income tax return.

2. 10-Day Rule, Proposed Dispositions and Timing

The 10-day rule is an actual-disposition notification deadline under subsection 116(3); it is not the only way to use the section 116 process. A vendor can notify CRA of a proposed disposition in advance. CRA's published administrative guidance recommends that a proposed-disposition notice be sent at least 30 days before the property is actually disposed of where possible. If the proposed transaction changes, the vendor may need to provide updated information or an actual-disposition notification.

3. How the 25% Rule Actually Works

A common misconception is that Form T2062 requires the vendor to send CRA exactly 25% of the gross sale price. That is not the general section 116 calculation for ordinary capital property. CRA states that, for a certificate under subsections 116(2) or 116(4), the payment on account of tax or acceptable security is generally 25% of the excess of the proceeds of disposition over the adjusted cost base. Outlays and expenses incurred to make the disposition are not deducted in this interim calculation. Those expenses can be relevant when the vendor calculates the final gain on the Canadian income tax return.

4. T2062A and Depreciable Property

A rental building or other property can be depreciable property even if the taxpayer did not actually claim capital cost allowance. CRA states that when depreciable taxable Canadian property is disposed of, Form T2062 is used to declare the gain or loss and Form T2062A is used for the capital cost allowance recapture or terminal-loss component. CRA states that T2062A should be filed even if capital cost allowance has never been claimed on depreciable property, and two certificates may be issued.

5. Purchaser and Lawyer Holdback: What the Law Actually Requires

It is misleading to state that a buyer's lawyer is universally 'legally required to hold back 25% of the gross purchase price.' The Income Tax Act places potential tax liability on the purchaser when the statutory section 116 certificate requirements are not met. The purchaser may then be entitled to deduct or withhold the required amount from amounts payable to the non-resident vendor. For ordinary taxable Canadian property other than specified subsection 116(5.2) property, the statutory purchaser-liability rate is generally 25% of the purchase price less any applicable certificate limit. For specified property covered by subsection 116(5.2), subsection 116(5.3) provides a 50% purchaser-liability rule. In practice, Canadian closing professionals commonly protect the purchaser by retaining sufficient funds until the section 116 issue is resolved, but the exact escrow or holdback arrangement is a transaction-specific legal and closing matter.

6. Certificate Types: T2064 vs T2068

The certificate number depends on whether the disposition is proposed or actual. Form T2064 is the Certificate for a proposed disposition. Form T2068 is the Certificate for an actual disposition. Form T2062 is the vendor's request/notification form; it is not itself the certificate.

7. Supporting Documents and CRA Identification Numbers

CRA states that the notification should include the required information and supporting documentation. Missing documentation can delay issuance of the certificate. The vendor's identification number is important because CRA uses it to credit payments and identify the vendor on the certificate.

8. Final Canadian Income Tax Return and Refund

The section 116 payment or amount withheld is generally an interim payment rather than the final settlement of the vendor's Canadian tax liability. CRA states that a vendor generally must file a Canadian income tax return for the year of disposition unless all applicable conditions for an exception are satisfied. The final return determines the actual tax and any refund resulting from an overpayment.

9. Principal Residence, Inherited Property and Other Special Cases

Special facts can materially change the section 116 calculation. A non-resident selling a former Canadian home should not assume that the principal residence exemption automatically eliminates the section 116 process. CRA states that a T2062 or similar notification can still be required, and the tax or security may be reduced where a valid principal-residence exemption applies. Individuals generally use Form T2091(IND) to designate a property as a principal residence and calculate the exemption, subject to the statutory eligibility rules.

10. Penalties and Consequences of Missing Section 116 Notification

A non-resident vendor who fails to comply with the applicable actual-disposition notification obligation can be subject to the subsection 162(7) penalty. CRA states that the penalty is $25 for each day the notification is late, subject to a minimum of $100 and a maximum of $2,500. This is not an automatic $2,500 penalty on the first day. CRA also states that taxpayer-relief provisions may permit a vendor to request cancellation or waiver where the statutory conditions for relief are met.

11. Practical Closing Checklist for a Non-Resident Seller

The safest workflow is to treat section 116 as a pre-closing issue rather than waiting until the transaction has closed.

12. 2026 Accuracy Notes

This guide distinguishes enacted section 116 rules from administrative CRA guidance and from transaction-specific practical arrangements. The earlier proposed increase in the capital gains inclusion rate should not be presented as an enacted universal 2026 rule. Finance Canada later confirmed that the government would not proceed with the proposed increase, so this page does not use the earlier proposed two-thirds inclusion rate as a general 2026 rule. Actual tax can still vary based on the taxpayer, property type, province or territory, treaty, capital-loss position, principal-residence rules, recapture and other facts.

Frequently Asked Questions