How to apply non-resident home taxes paid on Canadian tax return for a property sale?
So I'm helping a friend who's not a resident of Canada anymore but just sold their house in Toronto this year. They got hit with that 25% withholding on the sale price which was like $78,000 on a $312,000 sale. The good news is their lawyer filed that T2062 form showing the capital gain was much lower than the full selling price, so they already got back about $22,000. Now I'm supposed to help them file their non-resident tax return (T1-NR) but I'm totally confused about where to put the taxes that were already paid. The withholding amount they've already paid is definitely MORE than what they actually owe on the capital gain according to the calculations I've done. I've figured out their actual tax liability is around $37,000, but I can't figure out where on the form to show the $78,000 they already paid so they can get their remaining refund. Anyone dealt with non-resident property sales in Canada before? I feel like I'm missing something obvious but the forms are super confusing. Thanks in advance!
18 comments
Join the conversation
Avery Davis
This is actually a common issue with non-resident property sales in Canada. The withholding tax (25% of the gross sale price) is just a security mechanism to ensure tax compliance, not the actual final tax amount. For the T1-NR return, you'll need to report the disposition on Schedule 3 and calculate the actual capital gain. The withholding tax that's already been paid should be reported on line 43700 (total income tax deducted) of the return. Make sure you have the T2062 information slip that shows the amount that was withheld - you'll need this as supporting documentation. Since the withholding amount exceeds the actual tax liability, your friend should receive the difference as a refund once the return is processed. Also, don't forget to include a note explaining the situation in case the CRA has questions about the large amount on line 43700.
0 coins
Collins Angel
•Thanks for this info! Question though - does the client need to include the initial refund they already received (the $22k OP mentioned) in their calculations somewhere? Also, would Schedule 3 be filled out the same way as for residents or are there differences for non-residents?
0 coins
Avery Davis
•The initial refund they received would have reduced the total withholding tax amount that should be reported on line 43700. So you'd report the net amount that was actually withheld and not refunded yet (the $78,000 minus the $22,000 they already received back). Schedule 3 is filled out similarly, but there are some specific considerations for non-residents. Make sure you're reporting only Canadian-source income and using the appropriate inclusion rates for the capital gain. Non-residents are only taxed on specific types of Canadian income, which includes gains from disposing of "taxable Canadian property" like real estate.
0 coins
Marcelle Drum
I went through this exact headache last year! I highly recommend checking out https://taxr.ai for analyzing the T2062 and non-resident return forms. I was struggling with where to report the withholding taxes on my client's return and the AI tool actually walked me through the entire process step by step, identifying exactly which lines needed to be filled in. Their document analysis saved me hours of research trying to figure out how to correctly apply the withholdings. It also explained how the 25% withholding mechanism works with the final tax calculation, which was super helpful since this was my first non-resident return with property sales.
0 coins
Tate Jensen
•Does this tool work with specifically Canadian tax forms? I've got several cross-border clients and honestly the CRA forms are even more confusing than the IRS ones sometimes.
0 coins
Adaline Wong
•I've heard about AI tax tools but I'm skeptical... how does it handle the fact that tax rules for non-residents change almost every year? Did it take into account the specific province where the property was located? Different provinces have different rules.
0 coins
Marcelle Drum
•Yes, it specifically handles Canadian tax forms including all the non-resident ones! It was actually developed with both US and Canadian tax forms in mind, so it's perfect for cross-border situations. The interface lets you upload the actual forms so it can interpret them directly. It stays updated with the latest tax rules and I was impressed that it flagged some recent changes to non-resident reporting requirements that I wasn't aware of. And yes, it absolutely takes provincial differences into account - you select the relevant province during the analysis and it adjusts accordingly. In my case it was handling an Ontario property sale but has specific guidance for each province.
0 coins
Tate Jensen
Just wanted to follow up - I tried https://taxr.ai for a similar non-resident Canadian property sale situation last week and it was incredibly helpful! It immediately identified that I needed to record the withholding tax on line 43700 and gave me step-by-step guidance for completing Schedule 3 correctly. What surprised me was how it explained the relationship between the T2062 filing and the final return, which cleared up my confusion. It even generated a sample note to include with the return explaining the large withholding amount, which the CRA apparently appreciates. My client's return has been accepted with no issues, so I'm pretty impressed!
0 coins
Gabriel Ruiz
If you're still struggling with getting answers from CRA about this non-resident return, I'd suggest trying https://claimyr.com - they helped me actually reach a CRA agent after I spent days trying to get through. You can see how it works at https://youtu.be/_kiP6q8DX5c I had a similar non-resident property sale situation and needed clarification on exactly where to report the withholding taxes. The CRA phone queues were ridiculous - I kept getting disconnected after waiting for 2+ hours. Claimyr got me connected to an agent in about 20 minutes who confirmed everything I needed to know about reporting the withholdings on line 43700 and even sent me the specific bulletin that addresses non-resident property sales.
0 coins
Misterclamation Skyblue
•Wait, so how does this actually work? Do they just call CRA for you or what? I'm confused how a third-party service can get you through faster than just calling yourself.
0 coins
Adaline Wong
•Yeah right. Nobody can magically get through CRA's phone system. They probably just keep autodialing like everyone else does. I bet they just take your money and you end up waiting just as long.
0 coins
Gabriel Ruiz
•They don't call for you - instead, they use an automated system that navigates through the CRA phone tree and waits in the queue for you. When they reach a human agent, you get a call to connect you directly to that person. The system works because they're constantly monitoring wait patterns and optimal calling times. They essentially do the waiting part for you, so you don't have to stay on the phone for hours. They also navigate all those annoying menu options automatically. I was definitely skeptical at first too, but when I got connected to an actual CRA agent after trying unsuccessfully for days on my own, I was convinced.
0 coins
Adaline Wong
I have to apologize and eat my words about Claimyr. After my skeptical comment, I was desperate enough to try it for my non-resident client situation since the filing deadline was approaching fast. I couldn't believe it actually worked! Got connected to a CRA agent in about 25 minutes when I had been trying for over a week on my own with no success. The agent confirmed that line 43700 is indeed where you report the withholding taxes for non-resident property sales, and she even explained how to properly document the previous refund of the T2062 adjustment. Saved me from having to file an incomplete return and risk penalties for my client.
0 coins
Peyton Clarke
Just to add more context to this discussion - I've been filing non-resident returns for years, and here's what you need to know: 1. The 25% withholding on property sales is under section 116 of the Income Tax Act 2. The T2062 allows for a reduction of that withholding based on the actual gain vs. gross proceeds 3. When filing the T1-NR, the actual gain goes on Schedule 3 4. The non-resident tax rate is a flat 25% on taxable Canadian property gains 5. Any withholding tax (minus amounts already refunded through the T2062 process) goes on line 43700 Make sure you also include form NR73 if there's any question about residency status, as the CRA is very strict about this.
0 coins
Ev Luca
•Thank you so much! This breakdown is super helpful. Quick follow-up though - for the actual amount of withholding, should I be using what was initially withheld ($78k) or the net amount after they already got that partial refund through the T2062 process?
0 coins
Peyton Clarke
•You should use the net amount after the partial refund. So if $78k was initially withheld but $22k was already refunded based on the T2062 adjustment, you'd report $56k on line 43700 as the withholding tax amount. The CRA system should already have a record of both the initial withholding and the T2062 adjustment, but I always recommend including a brief note with the return explaining these amounts to avoid any confusion during processing.
0 coins
Vince Eh
Is it necessary to file a provincial return as well for a non-resident property sale? My client sold property in BC and I'm not sure if I need to complete a separate provincial form or if it's all handled in the T1-NR.
0 coins
Avery Davis
•For non-residents, you don't need to file a separate provincial tax return. The federal T1-NR handles both federal and provincial taxation. Non-residents pay a flat 25% federal tax on taxable Canadian property, with no separate provincial component. Just make sure you're correctly identifying the property's location on the return since this affects CRA's internal processing, but you won't need to complete any provincial-specific forms for a non-resident property sale.
0 coins