Section 116 Withholding Calculator
Selling Canadian real estate as a non-resident? See how much the buyer must hold back — 25% of the gross price without a clearance certificate, or 25% of the gain with a T2062 — and how much the certificate frees up.
The holdback is a deposit, not your tax. Your actual Canadian tax is on the taxable capital gain (50% of the gain) at non-resident rates, settled when you file a Canadian return for the year of the sale — any over-holdback is refunded. File Form T2062 (and, for Quebec, TP-1097-V) as early as possible: the certificate can take weeks, and without it the buyer must hold back on the gross price.
Educational estimate of the Section 116 withholding mechanics only. It doesn't compute your final capital-gains tax, principal-residence relief, recapture, or partial-year proration. Work with a cross-border CPA and file the certificate before closing.
Why the certificate matters so much
The default is brutal: without a Certificate of Compliance, the buyer must hold back 25% of the entire sale price— not the profit, the whole thing — and remit it to the CRA. On a $700,000 sale, that's $175,000 tied up, even if your actual gain (and tax) is a fraction of it. A T2062 reduces the holdback to roughly 25% of the gain, and any excess over your real tax is refunded when you file your Canadian return for the year of the sale. The catch is timing: the certificate can take weeks, so file the T2062 (and, for a Quebec property, the TP-1097-V) as early as you can — ideally before closing.
Frequently Asked Questions
What is Section 116 withholding?
When a non-resident of Canada sells taxable Canadian property — including a rental home or condo — Section 116 of the Income Tax Act requires the buyer to withhold and remit 25% of the GROSS sale price to the CRA, unless the seller obtains a Certificate of Compliance. It is Canada's equivalent of the US FIRPTA rules, and it exists to make sure a non-resident's Canadian capital-gains tax actually gets paid.
What does the T2062 clearance certificate do?
Form T2062 is the seller's application for a Certificate of Compliance. You report the sale and pay (or provide security for) 25% of the estimated capital GAIN rather than 25% of the gross price. Once CRA issues the certificate, the buyer's holdback drops from 25% of the whole sale price to roughly 25% of the gain — freeing up a large amount of cash at closing. File it before closing or within 10 days of the sale.
Is the 25% holdback my actual tax?
No — it's a deposit. Your real Canadian tax is on the taxable capital gain, which is 50% of the gain (the inclusion rate), taxed at non-resident graduated rates when you file a Canadian income tax return for the year of the sale. If the holdback exceeded the actual tax, CRA refunds the difference after you file. That's why getting the certificate and filing the return both matter.
What if the property is in Quebec?
Quebec adds its own layer. On a Quebec property, the buyer (through the notary) withholds an additional 12.875% for Revenu Québec on top of the 25% federal holdback, and you file a separate Quebec notification (Form TP-1097-V) alongside the federal T2062. So a Quebec sale involves two certificates, not one.
What's the deadline and penalty?
You must notify the CRA (Form T2062) within 10 days of the disposition — earlier is far better, since the certificate can take weeks to issue and closing often can't wait. Missing the notification deadline carries a penalty of up to $2,500 (and up to a further $2,500 for the Quebec side on a Quebec property).
How is Section 116 related to FIRPTA?
They are mirror images. FIRPTA is the US rule that makes a buyer withhold from a foreign person selling US real estate; Section 116 is the Canadian rule that makes a buyer withhold from a non-resident selling Canadian real estate. A cross-border owner who sells on one side deals with that side's regime — and reports the gain on both countries' returns, with a foreign tax credit to avoid double tax.
Clean books make the T2062 painless
BorderBird keeps your Canadian property's cost base and income history in order — so when you sell, the clearance-certificate numbers are ready.
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