CRA Certificate of Compliance: T2062 for Non-Resident Sellers

The CRA Certificate of Compliance for non-resident property sales is the document, issued under Section 116 of the Income Tax Act, that confirms tax on the capital gain from a sale of Canadian real property has been addressed and lets the sale proceeds move freely. To get one, the non-resident seller files Form T2062 and pays the Canada Revenue Agency 25% of the estimated capital gain (or provides acceptable security). Without that certificate in hand at closing, the buyer becomes personally liable to withhold and remit 25% of the entire purchase price, not just the gain.¹

The Two Obligations That Drive Everything Else

Section 116 puts parallel duties on the two sides of the transaction, and confusing them is the most expensive mistake in non-resident property sales.

The seller’s payment, made to obtain the certificate, is 25% of the estimated capital gain: sale price minus adjusted cost base. It functions as a deposit against the seller’s final Canadian tax for the year. Security acceptable to the CRA can be substituted for cash.¹

The buyer’s withholding, which kicks in if no certificate has been issued by closing, is 25% of the gross purchase price. It rises to 50% for depreciable property, Canadian resource property, timber resource property, and certain other categories. The buyer must remit that amount to the Receiver General within 30 days after the end of the month in which the property was acquired, and personal liability attaches if they fail to do so.¹

The gap between “25% of the gain” and “25% of the price” is large. Consider a property purchased for $500,000 and sold for $800,000. The seller’s payment to obtain the certificate is 25% of the $300,000 gain, or $75,000. If closing happens with no certificate, the buyer must withhold 25% of $800,000, or $200,000. That extra $125,000 sits frozen until the certificate arrives, and the buyer cannot simply accept the seller’s assurance that an application is pending.²

How to Apply: Form T2062

The application is Form T2062, “Request by a Non-Resident of Canada for a Certificate of Compliance Related to the Disposition of Taxable Canadian Property.” The CRA recommends submitting it at least 30 days before the sale date. If the property is depreciable, resource, or timber resource property, Form T2062A applies (in addition to or instead of T2062), and the required payment is calculated on the full proceeds rather than the gain portion.³

The form asks for the seller’s full legal name, current foreign address, and Canadian tax identification number (either an Individual Tax Number or a Business Number), plus the buyer’s name and address and a precise legal description of the property from the deed or title. As of the most recent CRA guidance, T2062 is not filed through an online portal. It is downloaded as a PDF and completed either digitally in Adobe Acrobat or by hand.⁴

Getting the Adjusted Cost Base Right

The adjusted cost base sets the size of the capital gain and, therefore, how much money the seller must send the CRA to get the certificate. It’s the number sellers have the most control over.

Start with the original purchase price, supported by the signed purchase agreement. Add capital improvements over the years of ownership: structural renovations, new roofing, major system replacements, finished basements, and similar upgrades that extended the property’s useful life or increased its value. Routine maintenance and cosmetic repairs do not count. Legal fees and land transfer tax paid on the original purchase also add to the base.

Documentation is where applications stall. The reviewing officer will verify every figure against invoices, contracts, and receipts. A seller who claims $80,000 in renovations but can produce only $40,000 in receipts will have the gain calculated on the documented amount, which can mean tens of thousands of extra dollars tied up until the annual return sorts it out.

Closing Before the Certificate Arrives

Most sales cannot wait several months for the CRA. In practice, closings happen before the certificate is issued, and the closing lawyer manages the gap through escrow. The buyer’s lawyer holds 25% of the gross price (50% for depreciable and resource property) in trust. The seller receives the balance. When the certificate is issued, the lawyer releases the required payment to the CRA and returns the remaining held funds to the seller.

The buyer’s remittance deadline still runs: 30 days after the end of the month of acquisition. In the past, the CRA issued “comfort letters” allowing a buyer to hold funds past that date without penalty while the application was under review. As of April 1, 2025, the CRA no longer issues comfort letters. Affected parties can instead request a filing and balance confirmation letter through My Business Account or Represent a Client. Coordination between counsel now matters more, because there is no informal cover for a lengthy delay.

Processing Times and What You Receive

The CRA’s standard estimate for straightforward applications is roughly 120 days when all supporting documents are attached. Complex cost base calculations, multiple properties, missing paperwork, or a requested appraisal push the timeline out. Four months is a reasonable planning figure, longer if the file has any complications.

For a proposed disposition, the CRA issues Form T2068 as the Certificate of Compliance. If the property has already been sold at the time the certificate is granted, the agency issues Form T2064 instead. Copies go to both the seller and the buyer, and the certificate authorizes release of the held funds.²

Deadlines and Penalties

The seller must notify the CRA of the disposition either before it happens or within 10 days after closing. Missing that window triggers a penalty of $25 per day, minimum $100, maximum $2,500.⁵

The penalty itself is modest. The real cost of late notice is what follows. Without timely notification, the certificate process cannot begin, and the buyer’s withholding obligation applies at the full gross rate. A buyer who fails to withhold and remit within 30 days after the end of the month of acquisition becomes personally liable for the full amount plus interest.¹ Filing T2062 at least 30 days before closing keeps the process manageable.

Reducing the Payment Required

Two situations can lower or eliminate the payment needed to obtain the certificate.

Principal Residence Exemption

If the property was the seller’s principal residence for some or all of the ownership period, part or all of the gain may be exempt. The exemption is limited to the years the seller was actually resident in Canada. A non-resident who owned a home for ten years but lived in Canada for only three of them receives a significantly reduced exemption. To claim it, attach Form T2091(IND) or a signed letter with the calculation to the T2062 application.⁴

Tax Treaty Claims

Sellers sometimes assume a tax treaty will exempt them from Canadian tax. Under the Canada-U.S. Tax Convention, Article XIII specifically allows Canada to tax gains from the sale of real property situated in Canada, even when the seller is a U.S. resident.⁶ Sellers claiming a treaty-based reduction must cite the applicable provision and prove residency. If the CRA does not accept the position, full payment or security must be provided before a certificate will issue.⁴

The Certificate Isn’t the End: File the Annual Return

Getting the certificate does not close out the seller’s Canadian tax obligations. Non-resident individuals file a T1 return by April 30 of the year following the sale, attaching Copy 2 of the certificate. Corporations file a T2 by their applicable deadline.²

The return is where the seller claims deductions the certificate application doesn’t accommodate: real estate commissions, legal fees on the sale, and other selling costs, which reduce the capital gain. The capital gains inclusion rate for individuals remains at 50% as of 2026, so only half of the net gain is included in taxable income. In many cases the tax actually owed is less than what was paid at the certificate stage, and filing the return is what triggers the refund. Skipping it leaves the overpayment with the government and exposes the seller to failure-to-file penalties.

A Note for U.S. Sellers

American citizens and U.S. residents owe reporting on both sides of the border. The gain is reported on Form 8949 and carried to Schedule D of Form 1040, with holding period determined under standard U.S. rules.⁷ To avoid double taxation, a foreign tax credit is claimed on Form 1116, limited to the lesser of the Canadian tax actually paid or the U.S. tax attributable to the Canadian-source income. Excess credit can be carried back one year or forward up to ten.⁸ The credit is based on the final Canadian tax after the T1 is filed, not the gross amount held during the certificate process. Currency conversion uses the exchange rate on the date the tax was paid to the CRA.

1
Justice Laws Website. Income Tax Act – Section 116
2
Canada Revenue Agency. Disposing of or Acquiring Certain Canadian Property
3
Canada Revenue Agency. T2062A Request by a Non-resident of Canada for a Certificate of Compliance
4
Canada Revenue Agency. Procedures Concerning the Disposition of Taxable Canadian Property by Non-Residents of Canada – Section 116
5
Canada Revenue Agency. Failure to Comply Penalty – Non-Resident Vendor Notification on the Disposition of Taxable Canadian Property
6
Internal Revenue Service. United States – Canada Income Tax Convention
7
Internal Revenue Service. Instructions for Form 8949
8
Internal Revenue Service. Publication 514, Foreign Tax Credit for Individuals