Last updated: October 28, 2026

If you are a non-resident of Canada selling Canadian real estate, section 116 of the Income Tax Act requires you to tell the Canada Revenue Agency (CRA) about the sale. Once you pay or secure the tax on the gain, the CRA issues a certificate of compliance. Without that certificate, the buyer can hold back 25% of the price, or 50% for some types of property, and send it to the CRA on your behalf.

This checklist covers who needs a certificate, which form to use, the deadlines, how the payment is worked out, the documents the CRA asks for, and what happens after the sale.

What is a section 116 certificate of compliance?

A certificate of compliance is the CRA's confirmation that a non-resident seller has notified it of a sale of taxable Canadian property and has paid, or provided acceptable security for, the tax on the gain. The CRA issues one of two certificates:

Form T2064, Certificate – Proposed Disposition of Property by a Non-Resident of Canada, if you notify the CRA before the sale.
Form T2068, Certificate – The Disposition of Property by a Non-Resident of Canada, if you notify the CRA after the sale.

A copy goes to both you and the buyer. The certificate protects the buyer from further tax liability for that sale. Your final tax is worked out later, when you file a Canadian income tax return for the year of the sale.

For the CRA's own overview, see Disposing of or acquiring certain Canadian property.

Who needs a certificate of compliance?

Section 116 applies when the seller is a non-resident of Canada for tax purposes at the time of the sale. Where the buyer lives does not matter. If you are a Canadian resident today but will be a non-resident when the sale closes, section 116 still applies.

It covers taxable Canadian property, which includes:

real property in Canada, such as a house, condo, cottage, rental property or land
property used in a business carried on in Canada
certain unlisted shares and interests in partnerships or trusts that, at any time in the previous 60 months, got more than 50% of their value from Canadian real property or resource property

Some property is "excluded property" and is not subject to section 116, such as shares listed on a recognized stock exchange and units of a mutual fund trust. The full list is on the CRA page above.

If there is more than one owner, each non-resident owner must file a separate notification for their share of the property.

If the property was your principal residence, you still have to notify the CRA. The tax or security required may be lower if the principal residence exemption reduces the gain. You can make the request with Form T2091(IND) or a signed letter attached to the notification. Years in which you were not resident in Canada can reduce or remove the exemption.

When to notify the CRA: before or within 10 days after the sale

You can notify the CRA about a proposed sale or an actual sale.

Before the sale. The CRA's information circular IC72-17R6 says to send a proposed-sale notice at least 30 days before closing, so the CRA has time to review it. If possible, the CRA will issue the T2064 before closing.
After the sale. The Act requires the notice no later than 10 days after the sale. For real estate, the sale date is usually the closing date.

If the actual sale ends up different from what you reported (a different buyer, a higher price, or a lower adjusted cost base), you must send a new notice for the actual sale. If the price ends up lower, you do not need to.

Late penalty. If you miss the 10-day deadline, the penalty under subsection 162(7) is $25 a day, with a minimum of $100 and a maximum of $2,500. The CRA's penalty notice lists the cases the 10-day timeframe does not apply to, such as proposed sales and property reported on Forms T2062A and T2062B. You can ask the CRA to cancel the penalty if the delay was caused by circumstances beyond your control.

T2062 or T2062A: which form do you need?

Form T2062 is the request for most taxable Canadian property held as capital property, such as a home, a cottage or land.
Form T2062A is for depreciable taxable Canadian property, real property held as inventory, and Canadian resource or timber resource property.
Form T2062B is filed by a life insurance company for a life insurance policy.
Form T2062C is filed by a buyer, not the seller, when buying treaty-protected property from a non-resident.

Selling a rental property? A rental building is usually depreciable property (property you can claim CCA on), so you may need both forms. Report the capital gain on Form T2062 and the recapture of capital cost allowance (CCA), or a terminal loss, on Form T2062A. The CRA says to file T2062A even if you never claimed CCA. In that case the CRA issues two certificates.

How much you pay to get the certificate

For a certificate to be issued, you pay tax, or give security the CRA accepts, equal to 25% of the amount by which the sale price exceeds your adjusted cost base. This is a payment on account of your final tax, not the final tax itself.

Selling costs are not counted here. Real estate commissions, legal fees and other selling costs do not reduce this payment. You deduct them when you calculate the gain on your income tax return for the year of the sale.
Depreciable property. For a rental building, the payment is 25% of the gain on the land and building, plus tax at the applicable federal rate on any CCA recapture.
Paying. The CRA accepts a certified cheque, a cheque from a lawyer's trust account, a bank draft or a money order. With a personal cheque, the certificate waits until the cheque clears. Instead of paying right away, you can ask the CRA's Revenue Collections Division about acceptable security.

The buyer's holdback: 25% or 50% of the price

If no certificate is issued, the buyer can become liable for tax on your behalf and is entitled to withhold that amount from the purchase price:

25% of the buyer's cost of the property, for most taxable Canadian property, or
50% for the property types reported on Form T2062A (such as depreciable property and real property held as inventory) and for life insurance policies.

If the CRA issued a certificate for a proposed sale (T2064), the holdback applies only to the part of the price above the "certificate limit" on that certificate.

The buyer must remit the amount within 30 days after the end of the month in which they bought the property. A buyer who remits late can be charged a penalty of 3% to 10% of the amount. A buyer is not liable if, after reasonable inquiry, they had no reason to believe the seller was a non-resident. This is why buyers' lawyers ask about the seller's residence.

Is the section 116 rate now 35%?

No. Some websites say the rate went up to 35%. As of October 2026, section 116 of the Income Tax Act (current to September 30, 2026) still says 25%, and 50% for the properties listed above, and the CRA's own pages say the same. The proposed increase in the capital gains inclusion rate was later cancelled.

Certificate of compliance checklist: what the CRA asks for

Each form has a "Supporting Document List". Missing documents delay the certificate. IC72-17R6 lists the information the CRA needs:

Your full name and address, including your country of residence.
For an individual, your date of birth and, if it applies, the date you left Canada.
Your Canadian identification number: a social insurance number (SIN), individual tax number (ITN), business number or trust account number.
The full name and address of the buyer (or proposed buyer).
A description of the property that lets the CRA identify it.
The estimated or actual sale price, with an appraisal or valuation report if there is one.
Your adjusted cost base, with documents that support it.

Also have ready:

the purchase documents that support your cost, plus records of capital improvements
the agreement of purchase and sale (or offer) for this sale
for a rental or other depreciable property, your CCA records and your past income tax returns, so the recapture can be checked
for a principal residence claim, Form T2091(IND) or a signed letter
for a tax treaty claim, the treaty provision you rely on and proof that you are resident in that country

Quote your SIN, ITN or other number on every letter and payment. The CRA warns that a misallocated payment can delay the certificate.

No SIN? Get a tax number first

You need a Canadian identification number for the notice. If you have never had a SIN, apply for an ITN with Form T1261. Our guide on how to apply for an individual tax number (ITN) as a non-resident walks through it. Start early, because the certificate cannot be issued until the CRA can identify you.

How to send the request

You can send the form and supporting documents:

online, using "Submit documents" in My Account, Represent a Client (for representatives) or My Business Account, choosing the Certificate of Compliance request, or
by mail, to the Section 116 Centre of Expertise for the region where the property is located. The addresses are on the CRA's section 116 page.

If an accountant or lawyer will deal with the CRA for you, authorize them first. Form T1013 has been replaced: you can add a representative online in your CRA account, or mail Form AUT-01 for offline access by phone, mail, fax and in person. See Authorize a representative.

How long does a certificate of compliance take?

The CRA does not publish a processing time for section 116 certificates on its processing times page. IC72-17R6 says the CRA issues the certificate as soon as possible once it has received and validated the information and documents and has received acceptable payment or security.

What you can control:

notify the CRA of the proposed sale early (the CRA suggests at least 30 days before closing)
send every document on the Supporting Document List the first time
get your adjusted cost base right: if the CRA's figure is different, it holds the certificate until you correct it
make sure every payment quotes your tax number

After the sale: file a Canadian tax return

The certificate is not the end. You generally still have to file a Canadian income tax return for the year of the sale:

individuals: by April 30 of the following year, with Copy 2 of the certificate (T2064 or T2068) attached
corporations: within six months after the end of the tax year
trusts: within 90 days after the end of the tax year

The return works out your actual tax on the sale. Selling costs are deducted here, and the payment you made for the certificate was made on account of that tax.

If you also rented the property out, your rental income has its own rules (Part XIII withholding, the NR6 and the section 216 return). See our guide to non-resident rental income tax in Canada and the section 216 return checklist.

Underused Housing Tax and your certificate

Under subsection 116(8), the CRA can refuse a certificate for certain residential property if the seller is an "affected owner" who has not met their obligations under the Underused Housing Tax Act. The Underused Housing Tax no longer needs to be filed or paid for 2025 and later years, but check that any earlier years are in order before you list the property.

Section 116 FAQs

Is a certificate of compliance mandatory for a non-resident selling Canadian property?

If you are a non-resident selling taxable Canadian property that is not excluded property, you must notify the CRA before the sale or within 10 days after it. The certificate is what the CRA issues once you have paid or secured the tax. Without it, the buyer can hold back 25% (or 50%) of the price.

How long does a CRA certificate of compliance take?

The CRA does not publish a processing time for these certificates. It issues them as soon as the information and documents are validated and payment or security is received, so a complete, early request is the best way to avoid delays.

Is a section 116 "clearance certificate" the same as a certificate of compliance?

People often call the section 116 certificate a "clearance certificate". The CRA's term is certificate of compliance (Forms T2064 and T2068). The CRA's My Account menu names "Certificate of Compliance" and "Clearance Certificate" as different items.

Do I need a certificate if I sold my principal residence?

Yes, you still notify the CRA. If the principal residence exemption reduces the gain, the tax or security required may be lower. Years you were not resident in Canada can reduce the exemption.

Can realtor and legal fees reduce the amount I pay for the certificate?

No. Selling costs are not counted in the 25% payment. You deduct them on your tax return for the year of the sale.

What happens if the certificate is not issued by closing?

The buyer can withhold the 25% (or 50%) holdback from the price and must remit it within 30 days after the end of the month of the purchase, unless the certificate has been issued by then.

Has the withholding rate gone up to 35%?

No. As of October 2026, section 116 of the Income Tax Act still uses 25% and 50%.

Does each co-owner need a certificate?

Each non-resident owner files their own notification for their share of the property.

What if I missed the 10-day deadline?

You can still notify the CRA, but a late-filing penalty of $25 a day applies, with a minimum of $100 and a maximum of $2,500. The CRA can waive or cancel it if the delay was beyond your control.

Selling Canadian property as a non-resident?

If you are planning to sell Canadian property as a non-resident, contact us before you sign the agreement of purchase and sale, so there is time to send the proposed-sale notice early. You can also read about our non-resident tax services.

CRA Certificate of Compliance: Non-Resident Property Sales