Selling Canadian Property as a Non-Resident: Holdbacks, Timelines, and How to Prepare

Owning property in Canada while living somewhere else eventually raises the question of how to sell it well. Selling Canadian property as a non-resident is entirely doable, but it runs on a different timeline than a regular sale, and the biggest surprises involve the CRA and the money you cannot touch while you wait. Non-resident clients have sold with me in Oakville, Mississauga, Burlington, and Milton, including a client in the United States who found me online and needed to sell a Mississauga property. Every one of those sales came down to coordination between the realtor, the accountant, and the lawyer from day one.

Quick answer

• Non-residents can sell property in Canada, but the sale requires a CRA clearance certificate under Section 116 of the Income Tax Act.
• The certificate application can only go in after a firm Agreement of Purchase and Sale, and recent client files have waited eight to nine months for it.
• The withholding tax is 25% of the capital gain for most property, and it can reach 50% for property used to earn income, such as a rental.
• Lawyers often hold back more than the strict withholding while the certificate is pending, because they are personally liable if too little is remitted.
• Your mortgage is discharged on closing like any other sale; the real cost of the holdback is your equity sitting in trust for months.
• Canada’s foreign buyer ban runs to January 1, 2027, so most non-residents who sell cannot currently buy back into the same markets.

Can a non-resident sell property in Canada?

Yes. Nothing stops a non-resident from listing and selling Canadian property, and the marketing and negotiation side works the same as any sale. What changes is the layer underneath: tax compliance, government processing times, and a closing where a share of the proceeds stays behind in trust. Sellers who line up the right team before listing tend to describe the process as slow but manageable. Sellers who discover the rules after accepting an offer tend to describe it differently.

What is the CRA clearance certificate, and how long does it take?

When a non-resident sells property in Canada, the Canada Revenue Agency requires a clearance certificate under Section 116 of the Income Tax Act, confirming the Canadian tax obligations on the sale have been addressed.

Here is the part that catches sellers off guard: the application cannot go in until there is a firm Agreement of Purchase and Sale. The property sells first, then the CRA paperwork starts. The CRA says it will send an acknowledgement letter within 45 days and that the full assessment can take up to 120 days. In practice it often runs far longer. One recent client waited eight months for the certificate; another waited more than nine. Government processing is the single biggest bottleneck in the whole process, and once the application is filed there is very little anyone can do to speed it up.

The tax side of this has its own depth, covered in whether non-residents pay tax on Canadian property.

How much is withheld, and how much does the lawyer hold back?

For most property, the withholding tax is 25% of the capital gain, meaning the increase in value between what you paid and what you sell for. For property used to earn income, which includes rentals, property used in a business, and property bought to renovate or resell, it can be as high as 50%. Your accountant calculates the figure and supports it with purchase records, receipts, and in some cases an appraisal, which is why finding those documents early matters.

There is a second layer sellers rarely expect. Your lawyer will often hold back more than the strict withholding amount, sometimes a substantial share of the proceeds, because they can be left personally liable if too little is remitted to the CRA. That money sits in the trust account until the certificate is issued and the final tax is settled, and the balance is then released to you. Because the amount withheld usually exceeds the final tax, a refund often follows once you file your Canadian return. Every file is different, so confirm the exact holdback with your real estate lawyer before closing.

What happens to your mortgage and your equity during the holdback?

A common worry deserves putting to rest: your mortgage is discharged on closing, exactly as it would be in any other sale. Nobody keeps making mortgage payments during the holdback period.

The real cost is different. What sits in trust is your equity, the money you planned to put toward your next home, retirement, or whatever comes after the sale. Plan your cash flow on the assumption that a large portion of your proceeds will be out of reach for several months, and build that wait into anything that depends on the money arriving.

Can you buy back into the Canadian market after selling?

For now, usually not. Since January 1, 2023, Canada has banned most foreign buyers from purchasing residential property, and the federal government extended the ban to January 1, 2027. It covers residential properties with three or fewer dwelling units in Census Metropolitan Areas and Census Agglomerations, which includes Oakville, Mississauga, Burlington, and Milton.

Exceptions exist for some temporary residents with valid work permits, certain international students, and non-Canadians buying with a Canadian spouse or common-law partner. For most non-resident owners, though, selling here means the equity cannot come back into the same market until the ban lifts. That is one reason some owners choose to sell rather than keep managing a property they cannot easily visit.

How do you prepare before you list?

Because the certificate application waits for a firm sale, everything you control should be ready in advance.

• Line up the accountant first. Before listing, connect with an accountant who works on cross-border and non-resident files. They prepare the Section 116 application so it can be filed the moment the sale goes firm, and if the property was ever rented, earlier tax filings may need to go in before the application can even be submitted.
• Choose a lawyer who has closed non-resident sales. The holdback mechanics, the timing of remittances, and the CRA notifications all have to land on schedule. Late notification to the CRA carries a penalty of $25 per day, with a minimum of $100 and a maximum of $2,500.
• Work with a realtor who knows the process. Someone who has coordinated non-resident sales keeps the listing, the buyer’s expectations, and the professional team moving on the same timeline, so nothing falls through the cracks.

Tax outcomes depend on your country of residence and your full return, so keep the specifics with your cross-border accountant. For a picture of how these sales feel from abroad, read the account of a landlord in the USA selling a Canadian property after a tenant passed away.

Where does a realtor fit in?

The selling part is usually the straightforward part. The tax compliance and the government processing create the real challenge, and that is where planning earns its keep. My role covers the whole timeline: an early conversation about the property and the process, preparing and marketing the home, coordinating with your accountant and lawyer so the paperwork is ready when the sale firms up, and keeping you informed from listing through to the release of your funds. Referrals to accountants and lawyers who handle Section 116 files regularly are part of that.

The cross-border selling checklist lays out every step for Americans and Canadian expats selling property in Canada from abroad, and you can download it below.

One last point belongs in every version of this conversation: confirm the exact holdback with your real estate lawyer before closing.

Get the Complete Cross-Border Selling Checklist

Enter your name and email to download the checklist. It covers what non-residents need to know about selling Canadian property from outside the country.

This post is for general information purposes only and should not be considered legal or tax advice. Non-resident property sales involve complex tax obligations, and I always recommend working with a qualified accountant and lawyer who can advise on your own circumstances.

Written by Damir Strk, Broker with RE/MAX Realty Specialists Inc., Brokerage, serving Oakville, Mississauga, Milton, and Burlington for more than 25 years. This article is general information, not legal or tax advice. Non-resident sales involve complex tax obligations that depend on your circumstances, so work with a cross-border accountant and an experienced real estate lawyer, and confirm the exact holdback with your real estate lawyer before closing.