Non resident : 25% funds with holding-urgent

[Dronadri]

We left Canada last year, August-2008, and kept our principal residence for sale(it was never rented) . We got the offer last week which is less than our purchase price and less than mortgage (We have to pay back 20,000 to close the deal). We accepted it to get rid of the property ASAP. The issue is with holding 25% of sale value until we get the clearance certificate from CRA, as we don`t have no equity at all.

We are sure that we don`t have to pay taxes as it was our principal residence and we are selling for less than purchase price. Possession date end of next month and CRA taking 2-6 months for clearance certificate. If 25% is with held by lawyer then deal will not go through as there is not enough money pay the bank. We can`t mobilize 25% funds from friends in this situation.

What I am doing now is

1. asking our lawyer to find the options

2. asking the bank to release the lean on closing day while the funds are still in the trust account. And make the arrangement with lawyer to transfer the funds directly to bank as soon as the clearance certificate is issued

We would appreciate your experience and advise to resolve this as we may be in trouble if the deal does not go through.
We are ready pay if some one has expereince in this situation and guide us.



Thanks in advance

 

[NorthernAlex]

Hi.I would be able tell you a bit more in a couple weeks, because I just initiated a sale for a German client. He is a Non resident, too.

A short phone call with an accountant here told me this:

The 25% would not be withheld from the sales price, but from the capital gain you achieved. If there was appreciation, there will some more %.

You need to file within 10days after closing form T2062http://http://www.cra-arc.gc.ca/E/pbg/tf/t2062/README.html and T2062A .

Sorry, not a how to but just some links.

 

[Dronadri]

Thank you.
As it is a CMHC mortgage. Does CMHC cover the shortfall of the mortgage by any way?

 

[ToddStokowski]

Based on the quick facts that you provided, the appropriate forms can be filed prior to closing and there may not be any withholding taxes on the sale.
The aforementioned depends on the date of closing, when you get the applications into CRA, the part of the Country you live in, your personal tax situation, residency certainty and some more particulars.
They are all solvable issues.
Todd Stokowski, CA