Fiction is not true and non-fiction is true. This is the simplest way of defining fiction and non-fiction. Non-fiction involves real things, real people, real events, real places and real writing.
While a writer based on his imagination creates Fiction, non-fiction is not created but only written based on facts.
While Non-fiction focuses on ideas or events that actually took place, fiction tends to be focussing on imaginary ideas and events. Coming to the characters, non-fiction deals with real people and fiction only creates characters. If some thing is said to have happened in real places, whether in the past or present, then it is non-fiction. But if something is said to have taken place in a fake place, then it is fiction.