As a Non-Resident, What Taxes Should I Pay on my Canadian Rental Property Income?
If you are a non-resident of Canada, but own a rental property and generate Canadian rental income in Canada, you might be confused about what your tax requirements are. Non-residents tax obligations can be confusing, so read on to see what your obligations are.
The first thing you must ensure is that you have a withholding agent for your rental property. The role of the withholding agent is to remit 25% of the rent collected each month to the Canada Revenue Agency, and release the other 75% to the property owner. Often non-resident owners will have a property management company carry this out for them.
Net Rental Income
With a rental income property as a non-resident, you will need to file a tax return under section 216. The good news is that this section allows you to deduct expenses associated with your rental income. These expenses can include things like property management fees, landscaping services, minor repairs, insurance, and other specific expenses. These are deductions, so they can be directly deducted from your gross income, meaning you only pay income tax on your net amount at the 25% rate.
An option to try and simplify this process is form NR6;” Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent from Real or Immovable Property…”. This form allows the withholding agent to instead remit 25% of the net income, and not 25% of the gross. NR6 is a great option if you have high monthly expenses, as it will help to increase your monthly cash flow.
The tax requirements for a non-resident with Canadian rental income can be a bit confusing. Your best bet would be to talk to a Chartered Professional Accountant at Naicker to get personalized advice for your situation to make sure you are managing your situation correctly.