Buyer Beware: Non Resident Withholding Tax

Buyer Beware you could be on the hook
for a 25% tax on your next purchase Hi there I’m Nawar Naji, a real estate
broker with Chestnut Park real estate in the City of Toronto. If this is your
first time visiting my YouTube channel make sure click on subscribe and that
bell button to get notified of my weekly videos. You might not be aware that there
is a 25% withholding tax for non-resident sellers. You might be
wondering how does this impact you as a buyer. Here’s an example if the
non-resident seller sells their property and is no longer in the country the
Revenue Canada or CRA can go after you as a buyer for that 25% tax. I know it’s
not fair but that’s just the way it is in Canada. Here are three things your
real estate lawyer will request from the seller’s real estate lawyer – 1 A Statutory
Declaration that the seller is a resident of Canada. If they can’t provide
that the second step is them requesting a Clearance Certificate which states
that the non-resident seller has paid the capital gains to Revenue Canada. Now this document takes a bit of time to get from the government so in most cases
they won’t be able to provide that. So the third option or the third step would
would be is for you or say your lawyer to hold back 25% of the purchase price
and this is designed to protect you from having to come up with 25% after the
transaction is completed and paying that to Revenue Canada. So the next time you
are looking for investment property or a home for yourself or your family make
sure you ask your real estate agent as well as your real estate lawyer to
confirm that the seller is a resident of Canada because that will save you the
hassle of having to deal with Revenue Canada and being on the hook for 25% tax
on the purchase of that specific property. I hope you’ve enjoyed this
video please make sure you like comment and subscribe and until next time
happy investing.

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