As with the purchase and sale of most things these days, the
buying or selling of a home involves the payment of tax. Not
only are real estate transactions subject to land transfer tax and
sometimes HST (harmonized sales tax), but there can also be income
tax implications if the value of the home has increased while the
seller owned the property. Ordinarily, that income tax
liability is the responsibility of the seller, but it can also be
the responsibility of the purchaser as well.
More specifically, where the seller of the property is a
non-resident and the seller does not fulfill their income tax
obligations, the buyer can become liable for the payment of the
income tax if certain precautions are not taken.
For instance, the buyer is obligated by the Income Tax
Act to make reasonable inquiries regarding the residency of
the vendor. As is often the case with the law, ignorance is
no excuse. Consequently, buyer’s lawyer will get a
statutory declaration stating that the seller is not a
But what do you do if the seller is indeed a non-resident?
Where the seller is a non-resident, there are other steps that a
purchaser can take to protect themselves. The buyer’s
lawyer should require that the seller’s lawyer withhold the
amount of money for which the buyer would be responsible to pay if
the seller fails to pay the tax. Currently, that liability
represents 25% of the sale price of the property! Before that
holdback is released, the seller should obtain and provide to the
buyer a certificate from the Canada Revenue Agency exempting the
property from any tax or verifying that all required tax has been
The taxes payable on the purchase and sale of a residential
property are complex and can be rather frightening. There are
three separate taxes that may be payable: land transfer tax; HST;
and income tax and they are not all paid by the same party to the
transaction. On top of that, as demonstrated above, one side
can be held liable for the payment of the other’s tax
obligations. As such, it is important that the sellers and
buyers of residential properties know their tax obligations and
take care to protect themselves.
The Ontario Court of Appeal confirmed that courts will generally support and uphold decisions of condominium directors because they are better positioned than judges to make decisions pertaining to their buildings.
According to the city bylaws in Calgary, the grading of lots for new buildings must be done properly so that the water never flows toward the new building or any other nearby properties, but away from those buildings.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).