‍What to Do When Selling a House After a Parent Dies as a Non-Resident, Form T2062

This article is for non resident children or beneficiaries who have to sell a house for a parent who died in Canada. I've helped clients deal with this exact scenario and you need to make sure it's done right to avoid CRA penalties.

I’ve had more than a few clients reach out in this exact situation: their parent passed away in Canada, and now they’ve inherited a home, but they live outside the country. They’re grieving, and suddenly they’re expected to figure out what to do with a Canadian property and deal with CRA.

If that’s you, here’s a short breakdown of how it works when a non-resident sells a house after inheriting it from a Canadian resident.

First Things First: There’s No Inheritance Tax in Canada

Let’s clear this up. There’s no “inheritance tax” in Canada. A lot of Reddit threads get this wrong.
Take this one for example:
Reddit – “25% Non-Resident Inheritance Tax”

What they’re referring to isn’t an inheritance tax. It’s a withholding tax that CRA imposes on non-residents selling Canadian real estate. It’s a protection tool (not a penalty). CRA’s trying to make sure people don’t sell Canadian assets and disappear without paying any taxes.

Why CRA Withholds 25% of the Sale Proceeds

If you’re a non-resident selling a home in Canada, CRA generally requires that 25% of the gross sale price be sent to them up front. That amount is held until you:

• File Form T2062 (to apply for a Certificate of Compliance)
• Later file a non-resident tax return to report the actual gain or loss
• Claim a refund if the 25% was more than the actual tax owing

Yes, in many cases 25% is too high...but CRA won’t calculate anything until you submit the correct forms.

What You Need to Do (Step-by-Step)

1. File Form T2062 – Certificate of Compliance

Before the sale closes, file CRA’s Form T2062 to notify them of the pending sale.
This form tells CRA:

• The adjusted cost base (usually the fair market value at the date of death)
• The selling price
• The estimated gain

This allows CRA to issue a Certificate of Compliance, so only the right amount is withheld.

🔗 Form T2062 – Certificate of Compliance

2. Request a Comfort Letter (Optional but Helpful)

If the sale is closing soon, your real estate lawyer might insist on a comfort letter from CRA while waiting for the Certificate of Compliance. I wrote a full blog on how to get that letter:

How to Get a CRA Comfort Letter for Sale of Property by a Non-Resident

3. File a Non-Resident Tax Return After the Sale

After the sale, file a Section 116 Non-Resident Tax Return. This lets CRA calculate the actual capital gain and tax owed.

If the tax is less than 25%, you’ll get a refund of the difference. If it’s more...you’ll need to pay the shortfall.

What If You Don’t File Form T2062?

If you skip it, the buyer might be legally required to withhold 25% of the gross sale price and send it directly to CRA. This can complicate everything and delay access to funds. It could also trigger penalties and interest if CRA sees it as non-compliant.

This penalty is $25 a day for each day the notification is late, with a minimum of $100 and a maximum of $2,500.

Summary

If you’re a non-resident and inherit a property in Canada:

• There’s no inheritance tax in Canada
• CRA does require a 25% withholding for non-residents selling real estate. Huge penalties if you don't.
• You can reduce that withholding by filing Form T2062
• After the sale, file a non-resident tax return to calculate the actual tax
• You may qualify for a refund if the withholding was too much

CRA Resources

• 🔗 CRA Guide: Disposing of Taxable Canadian Property – T2062
• 🔗 Form T2062

If you're unsure where to start, especially with property valuations, dealing with CRA, or calculating the adjusted cost base of an inherited home, hire a Canadian tax advisor who understands these filings. I’ve walked clients through this exact process...it’s doable, but timing and paperwork matter.

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This is not legally binding tax advice. This is educational analysis. Say hello if you need help.

hello@taxesmadesimple.ca

WhatsApp - 613.600.4194

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