Updated October 3, 2026 · DF Property Management
Who this applies to
These rules apply if you're a non-resident of Canada for tax purposes and you receive rent from Canadian real property — a condo at CityPlace, a house in Markham, a plaza unit in Mississauga. Residency is a question of fact (where your home, spouse, dependants and economic ties are), not citizenship. If you're unsure, the CRA's Form NR73 is used to request a determination. Owners who have just moved abroad, or who split the year between countries, should settle their status before the first rent payment after leaving — that's when withholding starts.
The default: 25% of gross rent
By default, the payer of the rent must withhold non-resident tax of 25% of the gross rent paid or credited to a non-resident — before any expenses. The payer is your agent if you have one (normally your property manager, or anyone who collects rent on your behalf); if you don't, it's the tenant.
The agent must:
- Remit the tax to the CRA on or before the 15th of the month after the rent is paid or credited.
- Issue an NR4 slip to the owner and file the NR4 information return, generally by the end of March of the following year.
- Keep records of rent collected and tax remitted.
An agent who fails to withhold and remit can be charged interest and penalties and may be held liable for the tax. That's why a serious property manager will raise this before taking on a non-resident owner, not after.
A better option: Form NR6
Gross-rent withholding usually far exceeds the tax actually owed, because mortgage interest, property taxes, insurance, condo fees and repairs aren't taken into account. Form NR6, an undertaking to file a Canadian return, lets the agent withhold 25% of the estimated net rental income instead.
- Prepare the estimate. Expected rent and expenses for the year, completed by the owner and the agent together.
- File early. The NR6 should be sent to the CRA on or before January 1 of the year, or before the first rental payment is due. A new NR6 is needed every year.
- Withhold on gross until approved. The agent withholds 25% of gross rent until the CRA approves the NR6.
- Withhold and remit on net. Once approved, the agent withholds 25% of the net amount and remits it by the 15th of the following month.
- File the section 216 return on time. If the NR6 was approved, the return is due by June 30 of the following year.
If the section 216 return isn't filed by that deadline, the owner becomes subject to tax on the gross rent after all, and the agent becomes liable for the shortfall. Missing June 30 is the single most expensive mistake in this system.
A simple illustration
Take a condo rented at $3,000 a month — $36,000 a year — with $22,000 of interest, property tax, condo fees, insurance and management. Without an NR6, the agent withholds 25% of $36,000: $9,000 for the year. With an approved NR6 based on estimated net income of $14,000, the agent withholds 25% of $14,000: $3,500. The final tax is settled on the section 216 return, which taxes net income at regular rates and credits what was withheld. These figures are illustrative only.
The section 216 return
A section 216 return is a Canadian income tax return that reports rental income and expenses, much like a resident landlord's T776. The tax is calculated on net income at regular rates, and the tax withheld during the year is credited against it — often producing a refund.
- Capital cost allowance can be claimed, but it's recaptured when the property is sold.
- If no NR6 was filed, a section 216 return can still be filed — generally within two years from the end of the year the rent was paid — to recover part of the gross withholding.
- Owners without a Social Insurance Number generally need an Individual Tax Number from the CRA (Form T1261) to file.
Selling the property
A non-resident selling Canadian real property generally needs to notify the CRA and obtain a clearance certificate under section 116. Without it, the buyer is generally required to withhold a significant portion of the purchase price. Start the process with your accountant and lawyer well before closing. Recapture of CCA and any capital gain are then reported on a Canadian return.
At the purchase stage
Ontario charges a Non-Resident Speculation Tax on purchases of residential property (one to six units) by foreign nationals and certain foreign entities, on top of land transfer tax. Federal rules have also restricted purchases of residential property by non-Canadians in recent years. If you haven't bought yet, get advice before signing.
Common mistakes
- Nobody withholds. A relative collects the rent and sends it abroad without withholding. Anyone acting on the owner's behalf can be treated as the agent — and be liable.
- Late NR6. Withholding stays at 25% of gross rent until the CRA approves it.
- Missing June 30. Tax on gross rent applies after all.
- Rent paid straight to a foreign account, which makes withholding and record-keeping harder.
- Leaving section 116 until the week of closing.
Practical setup for overseas owners
- A Canadian bank account for rent and expenses simplifies everything.
- One agent. Make sure exactly one person — your manager — is responsible for withholding, remittances and NR4s.
- Clean books. The NR6 estimate and section 216 return both depend on accurate income and expense records.
- A Canadian accountant familiar with non-resident filings.
How we work with non-resident owners
For owners living abroad, we act as the Canadian agent: collecting rent, withholding and remitting non-resident tax on schedule, issuing NR4 slips, and preparing the expense records your accountant needs for the NR6 and section 216 return. You get a monthly statement with invoices attached, and photos of every job — useful when you can't drop by. See also condo rental management and reporting rental income in Canada.
General information, not legal or tax advice. Non-resident rules are detailed and change; confirm on canada.ca and with a Canadian tax professional.