Hi Adi,
Thanks for your question — I’m happy to help clarify this for you.
As a non-resident of Canada, you are taxable on capital gains arising from the sale of Canadian real estate. Since you became a co-owner of your mother’s home in 2001, you may have a taxable capital gain on your share of the property from the time you acquired ownership in 2001 up until the date it is sold. Your mother’s share, however, is fully exempt from capital gains tax because she lived in the property as her principal residence from 1982 until she passed away in 2025. When she passed, you inherited her portion at the fair market value (FMV) on her date of death. This FMV becomes your cost base for the inherited share. Therefore, you will only pay tax on any increase in value of her portion from the date of death until the date you sell the house.
Because you are a non-resident selling Canadian real estate, you must comply with Canada’s Section 116 rules. This requires filing Form T2062 (Certificate of Compliance) with the CRA. Legally, the T2062 must be filed within 10 days after the closing date, but best practice is to file as soon as the sale becomes firm (after all conditions are waived). Filing early avoids penalties and reduces delays in obtaining the certificate. Until CRA processes the T2062, the buyer’s lawyer is required to hold back 25% of the gross sale price. After the sale closes, you must file a non-resident tax return (Section 116 Return) to report the actual capital gain, claim selling expenses, and recover any excess withholding tax.
Your capital gain will be based on two components. The first is the gain on your original ownership share, which is the increase in value from the FMV in 2001 (when you became co-owner) to the FMV at the time of sale. The second is the gain on the inherited portion, which is the increase in value from your mother’s date-of-death FMV in 2025 to the FMV at the time of sale. Canada taxes 50% of the net gain. To prepare properly, you should obtain valuations for the property as of 2001 and as of your mother’s date of death, as well as any supporting realtor comparables at sale. You should also keep all sale documents, including the listing, Agreement of Purchase and Sale, and your lawyer’s information.
If you need help preparing the T2062 forms or the non-resident tax return, our team at Madan CPA can take care of the entire process for you.
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