Have a client that used to be a Canadian tax resident. Owned a property here that they lived in. When they emigrated, they kept the property and started renting it out and filing S216 returns.
They are now selling the property. I have a couple of questions about the T2062 as I usually don’t deal with this form.
1- Do they need to complete T2062 ONLY or both T2062 and T2062A? When I talked to CRA I was told only T2062, but on the T2062 (under the supporting document list), it lists the T2062A in the case of a rental property. I’m not sure if it only applies to certain types of rental property or if it’s mandatory. Does anyone know?
The two forms look identical except the “details of the property” section which asks why type of property it was.
2- Their ACB will be the FMV of when they left Canada and they have an appraisal for that. Would the “Vendor’s acquisition date” then also be the date of emigration because of the deemed disposition, or should I use the original purchase date?
I have done a couple of these in the past 6 months. I completed and submitted BOTH the T2062 and T2062A (the two cases were rental properties). The reason for the T2062A is that you have to report the UCC. You’ll also note that the withholding tax on depreciable property is 50% of the gain unless you have the clearance certificate ready on the closing date.
As for the ACB, I believe the ACB would be the value when the client emigrated from Canada (plus any capital improvements since then). You should include copies of T776’s filed since the year of emigration. If the client had an agent sending in withholding tax, you’ll have to provide that person’s name and NR #.
Hi Kevin. Thank you for your reply. It helps a lot and answers a lot of questions.
I had thought that withholding was 25% of proceeds unless they have the clearance certificate (in which case it would be 25% of the gain).
Since you’ve had a few of these cases, do you know how the process usually works? The client doesn’t have any other assets they can put up as security. So, CRA will have to be paid from the proceeds. But I don’t see how the sale can complete if 50% withholding of proceeds has to go to CRA. The mortgage has to also be paid from the same proceeds. They got the mortgage when they were residents, so likely a high ratio mortgage. Do you know what happens when there just isn’t enough to pay the mortgage and the withholding and the client doesn’t have other funds to bridge the gap?
