For Canadian residents selling a US home, condo or rental
Selling US Property as a Canadian: What Happens to Your Tax
Usually tax on the gain in both countries, with a large holdback at closing. The buyer generally must withhold 15% of the sale price under FIRPTA, which is a prepayment and not the final tax. You report the sale on a US Form 1040-NR, can claim back any excess, and report the gain in Canada with a possible foreign tax credit. Gurleen Kaur, CPA licensed in British Columbia and Washington State, prepares the US returns and the Canadian T1 and T2. Based in Surrey, working with clients across Greater Vancouver, the rest of Canada and remotely.
Quick answer
What tax does a Canadian pay when selling US property?
The buyer generally withholds 15% of the amount realized (IRS). The real US tax is worked out on your gain on Form 1040-NR, and any excess can be claimed back. A withholding certificate may reduce the amount held back (IRS). You also report the gain in Canada, where a foreign tax credit may apply (CRA).
At a glance
- At closing
- 15% of the amount realized is generally withheld
- Reduce it
- Form 8288-B withholding certificate, requested early
- After the sale
- Form 1040-NR for the year of sale
- You need
- A US taxpayer ID, usually an ITIN
- Source
- IRS, checked November 4, 2026
What happens, in order
- Before closing. Check whether an exception applies (IRS), and whether to request a withholding certificate on Form 8288-B. The IRS generally acts within 90 days of a complete application (IRS)
- At closing. The buyer generally withholds 15% of the amount realized and sends it to the IRS (IRS)
- After the sale. You file Form 1040-NR for the year of sale, to report the gain and claim back any excess withholding
- In Canada. You report the gain on your Canadian return, and may claim a foreign tax credit for US tax paid (CRA)
For the details of the withholding itself, see FIRPTA withholding for Canadians.
You need a US taxpayer ID
Getting withholding credited generally needs a US taxpayer identification number. If you do not have one, you apply for an ITIN on Form W-7 (IRS). Start early, as it can take time.
Gurleen Kaur is not an IRS Certifying Acceptance Agent, and we do not file ITIN applications. We can tell you how to apply, and prepare your return once you have your number.
If it was a rental
Past rental filings affect the sale, including depreciation and whether you filed in earlier years. Bring your past US and Canadian returns. See Canadians with US rental property. If you owned through an LLC, see US LLC for Canadian residents.
How we help
Gurleen Kaur, CPA licensed in British Columbia and Washington State, prepares the US returns and the Canadian T1 and T2. So the US tax and the Canadian credit are worked out together. Everything is quoted after review, with a written scope before work begins. Your closing agent or lawyer handles the closing itself.
Common questions
Is the 15% my final tax?
No. It is a prepayment. Your actual US tax is worked out on your Form 1040-NR, and any excess can be claimed back.
Is the 15% on my profit?
No. It is generally on the amount realized, which is why the holdback can be much larger than the tax.
Can you get me an ITIN?
No. Gurleen Kaur is not an IRS Certifying Acceptance Agent. We can tell you how to apply on Form W-7.
Do I also report the sale in Canada?
Generally, yes. US tax paid may be claimed as a foreign tax credit.
Do you prepare both my US and Canadian returns?
Yes. Gurleen Kaur, CPA, prepares the US returns and the Canadian T1 and T2.
Sources
Every rule and figure on this page links to the IRS, CRA or other official source it comes from. Amounts change; we re-check them before each engagement.
- IRS: FIRPTA withholding
- IRS: Exceptions from FIRPTA withholding
- IRS: Withholding certificates
- IRS: About Form W-7
- IRS: Nonresident aliens, real property located in the US
- CRA: Line 40500, federal foreign tax credit
Gurleen Kaur, CPA licensed in British Columbia and Washington State. Last updated November 4, 2026. This page is general information, not tax or legal advice for your situation.
Related guides: FIRPTA withholding, US rental property, Should Canadians use an LLC?, Florida rentals.
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