Non-Resident Landlords: Canadian Rent, NR6 and Section 216

Do non-residents pay Canadian tax on rent from a Canadian property?

Yes. Rent from real property in Canada paid to a non-resident individual is generally subject to Part XIII tax of 25% of gross rent, before mortgage interest, repairs or other costs. If the correct amount is remitted, it is usually the final Canadian tax on that rent. A section 216 election lets you calculate Canadian tax on net rental income instead.

The rule depends on tax residence, not citizenship or where the rent is deposited. If your Canadian residence status is uncertain, start with Canadian tax residency. A treaty can lower the rate if its terms apply, but do not assume rent qualifies; the CRA says to use a lower treaty rate only if it applies.

Who withholds the tax, and when does the CRA get it?

The collection path depends on who receives the rent. A Canadian agent who collects it for you withholds and remits the tax; if an individual pays you directly to rent a home where someone lives and there is no agent, you must remit it yourself. That individual tenant does not have to withhold tax (Income Tax Act, section 215; CRA: T4061).

See the CRA's filing rules and section 215. Missing remittances can bring interest and penalties. Keep the lease, monthly rent ledger, remittance records and agent agreement so you can reconcile what was paid to the CRA.

If a residential tenant pays you directly and you have no Canadian agent, open a separate non-resident tax account through your CRA account or contact the CRA for an account number. Remit Part XIII tax through that account as you receive rent. The CRA lists online payment options; owners without a Canadian bank account can use a wire transfer (CRA: T4061).

Can Form NR6 reduce withholding to net rent?

Yes, but only with a Canadian agent and written CRA approval. You and the agent sign and submit Form NR6, estimating the rent and expenses for the year. After approval, the agent may withhold 25% of rent left after rental expenses are paid, instead of gross rent. Exclude CCA from the net-withholding calculation; you may claim it on the section 216 return (Form NR6 instructions).

Send a new NR6 by January 1 or before the first rent payment is due each year. Until the CRA approves it in writing, the agent must withhold on gross rent. The CRA can accept a later NR6, but the earliest effective date for net withholding is the first day of the month it receives the form; earlier gross withholding stands (CRA: rental withholding).

An approved NR6 also commits you to a section 216 return, even if the rental made a loss or no refund is expected. If you miss the filing deadline or fail to pay the tax by the payment deadline, the agent may owe the difference between gross-rent withholding and amounts already remitted, plus interest (Income Tax Act, section 216).

Do you need a Canadian property manager to use NR6?

You need a Canadian resident agent, but the agent need not be a property manager. The agent must act for you in receiving the Canadian rent and join you in the NR6 undertaking. If you collect residential rent directly without a Canadian agent, you can still file a section 216 return, but the NR6 net-withholding route is unavailable; you remit gross-rent tax yourself (CRA: T4144; CRA: T4061).

What is a section 216 return, and when is it due?

A section 216 return is a separate Canadian return, Form T1159, for your Canadian rental income. It replaces the final gross-rent tax calculation with tax on net rental income. An election covers all your Canadian rental properties for that year, not only the property with the largest expenses (CRA: T4144).

Form T1159 covers rent received while you were a non-resident. Other Canadian income, such as employment or business income, may require another return (CRA: T4144).

These deadlines follow section 216 and CRA guide T4144. Use Form T1159 for the rental year. If you are not eligible for a SIN and have no Canadian tax number, send Form T1261 with your return to request an ITN. If you applied for a SIN but have not received it, file on time with a note; the CRA will assign a TTN. Mail the return according to your country of residence (CRA: section 216 mailing addresses):

File on time even if an NR4 or receipt is missing, and attach a note about the missing item (CRA: T4144).

Which expenses and CCA can you claim?

On a section 216 return, deduct rental costs that qualify under the ordinary rental rules and relate to earning the Canadian rent. Form T776 helps calculate net income; include a rental income and expense statement with Form T1159.

The CRA rental guide distinguishes current costs from capital costs and says CCA cannot create or increase a rental loss. CCA claimed now can be recaptured when the property is sold, so keep the purchase allocation between land and building, improvement costs and past CCA records. For the choice and class, see capital cost allowance. A loss on a section 216 return cannot be used against another Canadian return or carried to another year (CRA: T4144).

How is section 216 tax worked out, and when is there a refund?

Form T1159 starts with gross Canadian rent, subtracts allowable expenses and any CCA, and calculates federal tax on the resulting taxable income. Its federal calculation includes a non-resident surtax instead of ordinary provincial or territorial tax. The return credits the Part XIII tax shown in box 17 of your NR4; if that credit exceeds the final tax, the CRA may refund the excess (CRA: completing the return).

An NR6 only changes withholding during the year. The final section 216 tax can be higher or lower than the amount remitted, depending on allowable costs and CCA. The basic personal amount is unavailable on a section 216 return (Income Tax Act, section 216). Do not treat net-rent withholding as the final tax.

What if you own the rental with a spouse or family member?

Each non-resident co-owner reports their own share of the rent and expenses. Owning with a spouse alone does not automatically create a partnership. The ownership shares, who receives the rent, and whether an actual partnership exists matter for NR4 reporting and any NR6 undertaking (CRA: T4036).

Each non-resident member of a partnership must join the NR6 undertaking, and each person filing under section 216 files their own return (CRA: T4144). Keep the title and ownership records alongside the rent ledger. See rental income for how co-owners split income and expenses.

What is the NR4 slip, and how do you use it abroad?

The NR4 records the gross Canadian rent paid or credited and the Part XIII tax withheld. A Canadian payer or agent gives it to you and files the NR4 information return by the last day of March after the rental year. If you remit residential rent directly without a Canadian agent, do not issue yourself an NR4. Request an NR4 pro forma in writing through “Submit Documents” in the non-resident withholding tax section of your CRA account, or mail the request to the CRA's Non-Resident Withholding Section at the Sudbury Tax Centre (CRA: T4061).

Attach a copy of the NR4 when claiming withheld tax on Form T1159. Keep it and your CRA assessment for the tax return in your country of residence. That country decides whether the Canadian tax qualifies for a credit or deduction and what currency conversion applies; the NR4 alone does not decide that result. For a US return, see property abroad.

If you rent out an eligible dwelling in Quebec for which rent was paid or payable on December 31, you must also file an RL-31 slip with Revenu Québec and give RL-31.CS to the tenants by the last day of February of the following year (Revenu Québec: RL-31 obligations).

What if no tax was withheld or past section 216 returns are missing?

Reconstruct the rent, expenses, remittances, NR6 approvals and filing history before submitting a late return. Unpaid Part XIII tax can lead to assessments, interest and penalties; an approved NR6 that was followed by a late return is especially serious because the CRA may assess the agent on gross rent (CRA: T4144).

The CRA has a one-time late-filing policy for some section 216 returns. It does not apply if the CRA already advised you of the Part XIII duty, started compliance action, or approved your NR6. Eligibility and the order of fixing withholding and returns need review before you file. For the broader disclosure process, see reviews, audits and voluntary disclosure.

Do you still owe the Underused Housing Tax?

The federal Underused Housing Tax does not require a return or payment for 2025 or later. Federal duties for 2022–2024 still apply where you were an affected owner (CRA: UHT update); missed returns can carry penalties even when an exemption removes the tax (CRA: UHT filing). Provincial and local vacancy taxes are separate.

Example

Illustrative Canadian dollars. A non-resident owns one Canadian apartment. Annual rent is C$24,000. Deductible operating expenses paid during the year are C$9,000, so net rent before CCA is C$15,000.

Without an approved NR6, gross-rent withholding is 25% of C$24,000, or C$6,000. With an approved NR6 and a Canadian agent, net-rent withholding is 25% of C$15,000, or C$3,750. The owner must file a section 216 return by June 30 of the following year after using NR6. The return calculates the actual tax; a refund exists only if remittances exceed it.

Different for you?

• You recently left Canada and kept your home: the departure year has separate rules. See leaving Canada.
• You are selling or have sold the rental: sale reporting, withholding and possible CCA recapture need a separate review. See non-residents selling Canadian property.
• You are considering CCA: the building cost, land split and prior claims change the calculation. See capital cost allowance.
• You run short-term accommodation: services may make the income business income rather than rent, and GST/HST or expense restrictions may apply. See GST/HST on residential property and get tax preparation help.
• You have several owners, no withholding, a new NR6 or missing years: ownership, agent liability and deadlines need a joined-up review. Gather leases, rent and expense records, NR4 slips, NR6 approvals, purchase cost with a land split, and past CCA schedules for tax preparation.