Non-resident landlords: tax on Canadian rental income

General information, not tax advice. Based on CRA pages and guides (T4144, T4061) for the 2025 tax year as published on canada.ca. Whether you are a non-resident depends on your ties to Canada, and tax treaties can change the result. Check the official sources below or talk to a tax professional.

Key points

• Non-residents pay Part XIII tax of 25% on gross Canadian rent, not net.
• Your Canadian agent (for example a property manager) withholds it. With no agent, you remit it to CRA yourself.
• Tax is due by the 15th of the month after the rent is paid or credited.
• An approved Form NR6 lets the agent withhold 25% of net rent instead.
• A section 216 return (Form T1159) lets you pay tax on net rental income and get back any extra tax withheld.
• With an NR6, the section 216 return is due June 30 of the next year. Miss it and you owe tax on gross rent.
• When you sell, section 116 requires notice to CRA within 10 days and a certificate of compliance.

The 25% withholding on gross rent

The default is simple and costly: 25% of gross rent, before any expenses. On $3,000 a month of rent, that is $750 a month, even if mortgage interest and property tax leave you with almost no profit.

A tax treaty can sometimes reduce the rate. CRA describes 25% as the statutory rate "unless reduced" by a treaty, so check your country's treaty.

Who withholds and pays

If you remit yourself, rental income is reported through a separate non-resident account. CRA says non-residents without a Canadian bank account can pay by wire transfer. You don't issue your own NR4 slip. You ask CRA in writing for an NR4 proforma.

Common mistake: assuming nothing is owed because the tenant didn't withhold. The obligation doesn't disappear. If tax isn't paid, CRA charges compound daily interest and may add a penalty. For payers who fail to withhold, T4061 sets a 10% penalty, or 20% for repeat failures made knowingly or through gross negligence.

NR4 slips

• The agent or payer gives you an NR4 slip showing gross rent (income code 13) and tax withheld.
• The NR4 information return and slips are due by the last day of March after the calendar year.
• Even with an approved NR6, the NR4 shows the full-year gross rent, with exemption code H.
• Late slips can cost $25 a day, with a $100 minimum and $2,500 maximum.

Form NR6: withhold on net rent

Form NR6 is an undertaking by you and your Canadian agent. Once CRA approves it, the agent can withhold 25% of net rent (rent minus rental expenses) rather than gross rent. That usually means far less cash held back each month.

1. Appoint a Canadian-resident agent. An agent is required for the NR6.
2. Estimate the year's rent and expenses with the agent and complete the NR6 together.
3. Send it to CRA on or before January 1 of the tax year, or before the first rental payment is due.
4. Until CRA approves it, the agent keeps withholding 25% of gross rent.
5. After approval, the agent withholds 25% of net rent and remits by the 15th of the next month.
6. File your section 216 return by June 30 of the next year. This is part of the NR6 deal.

The NR6 is filed for each tax year. Don't assume last year's approval carries over. Check with CRA or your agent.

The section 216 return

Electing under section 216 lets you file a special Canadian return (Form T1159) and pay tax on net rental income, at regular federal rates plus a non-resident surtax. You complete Form T776 to work out net income, including expenses and CCA. If more tax was withheld than you owe, CRA refunds the difference.

• Report all your Canadian rental properties together on one section 216 return.
• File even if you have a rental loss or no tax payable, if you have an NR6.
• CRA's T4144 guide says the return is mailed to a tax centre: Winnipeg for residents of the United States, the United Kingdom, France, the Netherlands and Denmark, and Sudbury for other countries.

Deadlines

The 2026 dates apply CRA's published rules for 2025 (June 30, 2026; December 31, 2027; April 30, 2026) one year forward. Confirm them on CRA's "When to file" page once the 2026 version is published.

Common mistake: filing the section 216 return late after an NR6. CRA says it will not process a subsection 216(4) return received after the due date. You are then taxed at 25% of gross rent, and your agent may be assessed for the difference plus interest.

Your Canadian agent's responsibilities

• Must be a resident of Canada.
• Withholds 25% of gross rent, or of net rent once the NR6 is approved.
• Remits the tax by the 15th of the month after rent is paid or credited.
• Gives you two copies of the NR4 slip and files the NR4 information return by March 31.
• Can be assessed if tax was under-withheld, for example when your section 216 return is late.

When you sell: section 116

Canadian real property is taxable Canadian property. A non-resident who sells it must deal with section 116:

1. Notify CRA within 10 days after the sale (or before, for a proposed sale). Use Form T2062, or T2062A for depreciable property such as a rental building.
2. Pay or give security for the tax. For capital property, CRA's IC72-17 describes a payment of 25% of the gain. Recapture of CCA on the building is taxed at the applicable rate.
3. CRA issues a certificate of compliance (T2064 for a proposed sale, T2068 for a completed sale).
4. File a Canadian return reporting the sale by April 30 of the next year.

If the buyer doesn't get a certificate, CRA says the buyer is entitled to withhold 25% of the price, or 50% for certain property. IC72-17 lists depreciable property among those types. The buyer must remit within 30 days after the end of the month of purchase. In practice, the buyer's lawyer often holds back funds until the certificate arrives.

Late notice can cost $25 a day, with a $100 minimum and $2,500 maximum.

Underused Housing Tax: current status

CRA says affected owners do not need to file a return or pay the Underused Housing Tax (UHT) for 2025 and later calendar years. The change came in the Budget 2025 Implementation Act, No. 1, which received Royal Assent on March 26, 2026. The UHT return and tax still apply to the 2022, 2023 and 2024 calendar years. If you missed a return for those years, look at it now.

FAQ

Related tools and guides

• Rental property expenses you can deduct in Canada (T776)
• CRA T776 rental income basics: what to prepare
• Year-end T776 pack (net rent figures for your NR6 and section 216 return)
• Track rent and expenses by T776 line in your Landlord Pilot workspace

Official sources

• CRA: Rental income – filing and reporting requirements for non-residents
• CRA: T4144 Income Tax Guide for Electing Under Section 216
• CRA: Section 216 – when to file
• CRA: Important reminder about Form NR6
• CRA: Form NR6
• CRA: T4061 NR4 – Non-Resident Tax Withholding, Remitting, and Reporting
• CRA: Disposing of or acquiring certain Canadian property (section 116)
• CRA: IC72-17R6, Disposition of taxable Canadian property by non-residents
• CRA: Introduction to the Underused Housing Tax

Last checked: 2026-11-01.