Last updated: October 22, 2026

If you live outside Canada and rent out a property here, Canada taxes that rent. By default, 25% of the gross rent goes to the Canada Revenue Agency (CRA) as non-resident tax. Two CRA options let you pay tax on your net rental income instead: filing a Section 216 return after the year ends, and filing Form NR6 so less is withheld during the year. This guide explains how each works, the deadlines, what changes if you live in the United States, what happens when you sell, and where the Underused Housing Tax stands now.

Non-resident rental income at a glance

  • Default: 25% non-resident tax on the gross rent. If nothing else is filed, that is generally your final Canadian tax on the rent.
  • Section 216 return: report your net rental income and claim a refund of tax withheld over the amount you owe. File within two years after the end of the year the rent was paid.
  • Form NR6: you and your Canadian agent ask the CRA to approve withholding on net rent during the year. If approved, a Section 216 return is mandatory and due by June 30 of the following year.
  • Selling: you must notify the CRA within 10 days of the sale and get a certificate of compliance, or the buyer can hold back part of the price.
  • Underused Housing Tax: no return or tax for 2025 and later years. Obligations for 2022 to 2024 still apply.

The default rule: 25% of gross rent

If you are a non-resident of Canada and receive rent from real property in Canada, non-resident tax of 25% applies to the gross rent paid or credited to you. That is the full rent, before any expenses such as mortgage interest, property tax, condo fees or repairs.

  • If you have a Canadian agent (usually a property manager), the agent must withhold the 25% and send it to the CRA by the 15th day of the month after the month the rent is paid or credited to you.
  • If you rent out a home directly to a tenant, a tenant paying rent for their own residence is not expected to know whether you live in Canada or to withhold the 25%. In that case you must send the 25% to the CRA yourself. The CRA can charge penalties and interest if it isn't remitted.

After the year ends, the payer or agent reports the gross rent and the tax withheld on an NR4 slip, due by the end of March. (If you remit the tax yourself, the CRA's NR4 guide has separate instructions.) If you do nothing else, the CRA generally treats the 25% withheld on gross rent as your final Canadian tax on that rent, and you do not have to file a return.

The problem is that 25% of gross rent is often far more than the tax on your actual profit. That is where Section 216 and Form NR6 come in. The CRA explains the rules on its non-resident rental income page.

Section 216 return: pay tax on net rental income

A Section 216 return (Form T1159) lets you report your Canadian rental income and expenses and pay tax on your net rental income instead of the gross. If the tax withheld during the year is more than the tax on your Section 216 return, the CRA refunds the difference.

What to know before you file:

  • All your Canadian rentals go on one return. If you own more than one Canadian rental property, report all of them together on one Section 216 return.
  • It is a separate return. A Section 216 return covers only the rental income. Other Canadian income, such as a taxable capital gain from selling Canadian property, is reported on a separate return.
  • Expenses and capital cost allowance. You calculate net rental income on Form T776 and can claim allowable expenses. You can also claim capital cost allowance (CCA, the tax term for depreciation), but CCA claimed on a Section 216 return can be recaptured when you sell (see below).
  • Rental losses stay inside the Section 216 return. You cannot use a loss on a Section 216 return to reduce income on another Canadian return, or on a Section 216 return for another year.
  • Short-term rentals. If you own a non-compliant short-term rental (a residential property rented, or offered for rent, for less than 90 consecutive days), you cannot deduct the expenses related to that short-term rental income.
  • Tax rate. Tax on a Section 216 return is federal tax, which includes a surtax for non-residents of Canada.
  • Tax number. If you are not eligible for a social insurance number, apply for an Individual Tax Number with Form T1261. Our guide explains how to apply for an ITN.

The CRA's full instructions are in Guide T4144, Income Tax Guide for Electing under Section 216. For a document checklist, see our Section 216 return checklist.

Form NR6: pay less tax during the year

If you would rather not wait until after the year ends for a refund, Form NR6 lets your agent withhold 25% of your net rental income (rent minus the rental expenses paid) instead of the gross.

  • Who files it: you and your Canadian agent complete Form NR6 together. The agent is a resident of Canada who acts for you on the rental income, usually a property manager.
  • When: the CRA should receive Form NR6 on or before January 1 of the year, or before the first rental payment is due. The CRA accepts NR6 forms during the year, but net withholding then starts only from the first day of the month in which the CRA receives the form.
  • Until it is approved: your agent must keep withholding 25% of gross rent until the CRA approves the NR6 in writing.
  • The undertaking: if the CRA approves your NR6, you must file a Section 216 return for that year by June 30 of the following year. You must file even if you have no tax payable, are not expecting a refund, or have a rental loss.
  • If you miss June 30: you become subject to non-resident tax on the gross rent. If the full amount was not withheld, the CRA can assess your agent for the difference.
  • NR4 slip: your agent still reports the gross rent for the whole year on an NR4 slip.

The CRA's Form NR6 page has the current form.

Section 216 deadlines

For rent paid in 2025, the CRA's deadlines are:

  • No NR6, 25% withheld on gross rent all year: within 2 years after the end of the year, so December 31, 2027
  • The CRA approved your NR6: June 30, 2026
  • You sold the property and must report recaptured CCA: April 30, 2026
  • Paying any balance owing on a Section 216 return: April 30, 2026

The same two-year rule applies each year. For rent paid in 2024 with 25% withheld on the gross, the deadline is December 31, 2026. If you have not filed for 2024 and the withholding was more than your tax on net income, that refund window is closing.

A Section 216 return filed after its deadline is generally not accepted. The CRA does have a one-time late-filing policy that may accept a late return if you qualify. It does not apply if the CRA approved your Form NR6, or if the CRA has already told you about, or acted on, your Part XIII obligations. Under the policy the CRA does not charge penalties, but it may still charge interest. The CRA's Section 216 due-date page lists the current dates.

Worked example: withholding vs Section 216 vs NR6

This example uses the figures from the CRA's own example in Guide T4144. A non-resident owns one Canadian rental with an agent collecting the rent:

  • Gross rent for the year: $20,000
  • Allowable rental expenses: $15,000
  • Net rental income: $5,000

Option 1: do nothing. The agent withholds 25% of $20,000 = $5,000. No return is filed, and the $5,000 is generally the final Canadian tax on the rent.

Option 2: file a Section 216 return after the year. The agent still withholds $5,000 during the year. You then file a Section 216 return within two years, and your tax is calculated on the $5,000 of net income instead of the $20,000 gross. The CRA refunds the amount by which the $5,000 withheld exceeds that tax.

Option 3: file Form NR6 before the year. Once the CRA approves it, the agent withholds 25% of the $5,000 net = $1,250 during the year, so you keep more cash each month. You must file a Section 216 return by June 30 of the following year. If you don't, the CRA's example shows the agent owing the extra $3,750 (the $5,000 that should have been withheld on gross rent, minus the $1,250 withheld on net), plus interest.

Your actual tax on the Section 216 return depends on the federal rates for the year, including the non-resident surtax. Our non-resident tax team works it out as part of preparing your Section 216 return.

US residents and US citizens with Canadian rental property

If you live in the United States, the Canadian rules above apply to you in the same way: 25% non-resident tax on gross rent, with the option of Form NR6 and a Section 216 return.

The Canada–United States tax treaty does not change that:

  • Article VI says income from real property may be taxed in the country where the property is located, and it sets no maximum rate. Canada can therefore apply its normal 25% non-resident tax to rent from your Canadian property. The treaty's reduced rate for royalties (Article XII) covers items such as copyrights, patents and equipment, not rent from real property.
  • Article XIII says gains from selling real property may be taxed in the country where it is located. Selling Canadian real estate therefore does not escape Canadian tax, and the section 116 process below applies.
  • Article XXIV provides that the United States allows its citizens and residents a credit against US income tax for income tax paid to Canada, subject to the limits of US law.

Your US return is a separate filing with its own rules for reporting the Canadian rent and claiming the credit. The NR4 slip issued for your Canadian rent shows the gross rent and the Canadian tax withheld. If you are a US citizen, our U.S. tax team prepares US returns. The treaty text is published by the Department of Finance: Canada–United States Tax Convention.

Selling your Canadian rental property as a non-resident

When a non-resident sells Canadian real estate, section 116 of the Income Tax Act applies. The key steps:

  1. Notify the CRA within 10 days. You must notify the CRA within 10 days after the sale, or before it as a proposed sale. Use Form T2062 for the gain on the land and building. For a rental building (depreciable property), also file Form T2062A, even if you never claimed CCA; the CRA then issues two certificates.
  2. Pay or secure the tax. For the certificate, you pay or provide security for 25% of the gain (proceeds minus your adjusted cost base). If CCA is being recaptured, an additional amount based on federal tax rates applies to the recapture.
  3. The certificate of compliance. Once the payment or security is received, the CRA issues a certificate of compliance.
  4. What the buyer can withhold. If no certificate is issued, the buyer can become liable for your tax and is entitled to withhold 25% of the price (50% for certain property, such as depreciable property), minus any certificate limit. The buyer must remit it within 30 days after the end of the month in which they bought the property.
  5. Penalty for late notice. A late notification costs $25 a day, with a minimum of $100 and a maximum of $2,500.
  6. File a Canadian return. Generally, report the sale on a Canadian income tax return by April 30 of the following year and attach copy 2 of the certificate. Recaptured CCA on a property you claimed CCA for on a Section 216 return goes on your Section 216 return, which is due April 30.

If you don't have a social insurance number or Individual Tax Number, the CRA asks that you send the ITN application separately from your certificate request to avoid delays. Our certificate of compliance checklist lists the documents the CRA asks for. The CRA's rules are on its disposing of Canadian property page.

The Underused Housing Tax: what still applies

The Underused Housing Tax (UHT) was an annual 1% federal tax on vacant or underused housing that took effect on January 1, 2022. It generally applied to foreign national owners.

  • 2025 and later years: Budget 2025 Implementation Act, No. 1 received royal assent on March 26, 2026. Affected owners do not need to file a UHT return or pay the UHT for 2025 and later calendar years.
  • 2022, 2023 and 2024: the requirement to file a UHT return and pay the tax still applies for these years, along with the related penalties and interest. The minimum penalty for not filing is $1,000 for individuals and $2,000 for corporations.
  • Selling: the CRA can refuse to issue a section 116 certificate of compliance if a non-resident, non-Canadian owner has not met their UHT filing and payment obligations. If you owned Canadian housing in 2022 to 2024 and plan to sell, check those years first.

See the CRA's UHT notice for details.

Common mistakes non-resident landlords make

  • Not withholding at all, especially when renting directly to a tenant without a property manager.
  • Filing NR6 and then missing the June 30 Section 216 deadline, which brings back tax on the gross rent.
  • Missing the two-year window for a Section 216 refund.
  • Claiming CCA without planning for the sale, then being surprised by recapture.
  • Notifying the CRA late, or not at all, when selling. Late notice brings a penalty, and the buyer can hold back 25% or 50% of the price.
  • Forgetting 2022 to 2024 UHT returns before selling.

How GTA Accounting helps non-resident property owners

Our non-resident tax team files Section 216 returns and prepares Form NR6 and NR4 slips. Our real estate tax accountants work on property matters from purchase through to sale. US citizens can also use our U.S. tax return services. Contact us with your questions.

Non-resident rental income FAQs

Do non-residents pay tax on Canadian rental income?

Yes. By default, 25% non-resident tax applies to the gross rent. You can file a Section 216 return to pay tax on net rental income instead, and claim a refund of the excess withheld.

What is the difference between NR6 and a Section 216 return?

A Section 216 return is the annual return that calculates tax on your net rental income. Form NR6 is an undertaking, filed by you and your Canadian agent before the year, so less tax is withheld during the year. An approved NR6 requires you to file a Section 216 return by June 30 of the following year.

Do I have to file a Section 216 return?

Only if the CRA approved your Form NR6, or you are reporting recaptured CCA after selling. Otherwise it is optional: the 25% withheld on gross rent is generally your final tax, and you file a Section 216 return only if you want to pay tax on net income and get a refund.

What happens if I miss the June 30 deadline after filing NR6?

You become subject to non-resident tax on the gross rent. If the full 25% of gross rent was not withheld, the CRA can assess your agent for the difference, plus interest.

Can I claim depreciation on my rental?

You can claim capital cost allowance on a Section 216 return, but it may be recaptured as income when you sell. Recaptured CCA must be reported on a Section 216 return by April 30 of the year after the sale.

I am a US resident. Does the tax treaty reduce the 25%?

No. Article VI of the treaty lets Canada tax income from real property located in Canada and does not cap the rate, so the 25% default, NR6 and Section 216 options work the same way for US residents. Under Article XXIV, the United States allows its citizens and residents a credit for income tax paid to Canada, subject to US law.

Do I still need to file the Underused Housing Tax?

Not for 2025 or later years. For 2022, 2023 and 2024, affected owners still have to file and pay, and penalties and interest still apply.

When should I apply for a certificate of compliance?

As early as you can. You can notify the CRA before the sale as a proposed disposition, and the CRA asks that this notice be sent at least 30 days before the sale so it has time to review it. Otherwise the deadline is 10 days after the sale. The certificate is issued once the payment or security is received. Sending your ITN application separately, and having your documents ready, helps avoid delays.

General information only, not tax advice for your specific situation. Rates, forms and deadlines can change; confirm current rules with the CRA or speak with a professional.