I'm selling my former primary residence in BC this year, after moving to the US in 2023 and becoming a non-resident for Canadian tax purposes. The property, which included a legal basement suite, was rented out from our move in 2023 until September 2024, and has been vacant since. Our lawyer is advising a 50% withholding tax on the gross sale price due to the rental income, which would make the sale untenable. I need help navigating this.
1) Is the 50% withholding on the gross sale price correct for a former primary residence?
2) Should the withholding be based on the capital gain, not the gross sale price?
3) If considered a rental property, should the calculation be 25% on the land and 50% on the building?
4) If the withholding is done in Lawyer escrow account, would it not be earning interest until the clearance certificate is received which might take 4-6 months?
Can you recommend resources or specialists in non-resident real estate transactions in Canada?
T2062 Withholding question
Moderator: Mark T Serbinski CA CPA