As you’re probably aware, flipping real estate is a business and the Canada Revenue Agency is going to want their cut whether you’re a Canadian citizen or not. But what if they can’t track down the foreign seller? Then they’ll get it from the buyer. That’s right, if you’re buying property from a foreign seller there’s a small but important detail you should be aware of:
Under section 116 of the Income Tax Act, when a non-resident disposes of taxable Canadian property, the purchaser “is required to withhold 25 per cent of the purchase price…until such time as a certificate of compliance is obtained by the non-resident vendor.”
The non-resident vendor is required to notify Canada Revenue of the disposition either prior to the sale or 10 days after the disposition date.
