It has long been the case that buyers are responsible for withholding 25% of the purchase price for the CRA to determine if capitol gains are owing, but now there will be a checkbox for the seller to indicate their residency status:
The B.C. government will soon require sellers to disclose their residency during a real-estate transaction so that information can be shared with the Canada Revenue Agency (CRA).
Observers say it’s a much-needed change that replaces an honour system that was open to abuse by speculators seeking to avoid paying capital-gains tax on properties they don’t live in. But some worry that because the province is placing the onus for confirming that information on the buyer, it exposes them to potential fines or even jail time if they get it wrong. A buyer who doesn’t properly certify a seller’s residency status could also be on the hook for unpaid capital-gains tax.
The government has changed a tax form used to collect the property-transfer tax to include whether the sellers in real estate transactions are Canadian residents under the Income Tax Act. Canadian resident homeowners do not pay tax on the increased value – or capital gains – of a property designated as a principal residence. Non-residents must pay capital-gains tax at the time of a sale.
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