Non-Resident Property Tax Canada: Rental Withholding, Section 216 and Selling
Updated
Owning Canadian property as a non-resident brings its own set of tax rules. Rental income faces a default 25% withholding on gross rent, but a section 216 election lets you deduct expenses and pay tax on net income instead, often saving thousands. If you sell, you must obtain a clearance certificate (Form T2062) or the buyer is required to withhold 25% of the gross sale price. Provinces add their own taxes on foreign buyers, and federal and municipal rules on vacant homes and purchases by non-Canadians sit on top. This guide is part of the international and cross-border tax guides.
Whether these rules apply to you depends on your residency status, not your citizenship; the test is explained in am I a Canadian tax resident.
Buying: The Foreign Buyer Ban
A federal law bars most non-Canadians from buying residential property in Canada for a set period, with exemptions for some temporary residents and other groups. Who is covered, the exemptions and the current end date are on the foreign buyer ban page.
Provincial Foreign Buyer Taxes
BC Foreign Buyer Tax
Tax
20%
Where
Specified areas (Metro Vancouver, etc.)
Who
Foreign nationals, foreign corps
On
Purchase price
Exemptions
Some work permit, PR situations
Ontario Non-Resident Speculation Tax
Tax
25%
Where
Anywhere in Ontario
Who
Foreign nationals, foreign corps
On
Purchase price
Exemptions
Some refund opportunities
Other Provinces
Province
Foreign Buyer Tax
BC
20% (specified areas)
Ontario
25%
Other provinces
Generally none
Underused Housing Tax (UHT)
The federal Underused Housing Tax required an annual return from many non-resident owners of Canadian homes. Its current status, and what still applies to past years, is covered on the Underused Housing Tax page.
Rental Income Tax
Withholding Tax (Part XIII)
Default Rule
Tax rate
25%
On
Gross rent
Withheld by
Tenant or agent
Remitted to
CRA
Rent is one of several kinds of Canadian income covered by Part XIII withholding; the full table of rates by income type and treaty is in the non-resident tax guide.
Example Without Election
Situation
Monthly rent
$2,500
Gross annual
$30,000
25% withholding
$7,500
Your expenses
Not considered
Section 216 Election
Better Option
File Canadian return
Elect under s.216
Report
Net rental income
Deduct
Expenses
Tax on
Net income
Example With Section 216
Situation
Gross rent
$30,000
Expenses
$18,000
Net income
$12,000
Tax (~25% bracket)
$3,000
Savings
$4,500
NR6 Form
Process
File NR6
By January 1 of the year, or when the first rental payment is due
CRA approves
Reduced withholding
Withhold
25% of net (not gross)
File s.216 return
After year end
Selling Canadian Property
Non-Resident Selling
Process
1. Notify CRA
At least 30 days before the sale if possible; no later than 10 days after
2. Get clearance certificate
Required
3. Otherwise
Buyer withholds 25%+
Certificate of Compliance
Form T2062
File
Before closing preferred
Purpose
Calculate tax owing
If approved
Buyer doesn’t withhold
Timeline
6-8 weeks
Without Certificate
Buyer Must
Withhold
25% of gross sale price
Remit to CRA
Within 30 days after the end of the month of purchase
You
File return to recover overpayment
Capital Gains Tax
Standard Rules
Gain calculation
Sale price - ACB
Inclusion rate
50% (flat, no threshold)
Tax rate
25% flat or file return
Section 116 Compliance
Non-Resident Seller
Must notify CRA
Proposed disposition
Pay or post
Security for tax
Get certificate
Or buyer withholds
Property you still own when you emigrate is not deemed sold on departure, unlike most investments; the leaving Canada tax checklist covers what is.
Municipal and BC Vacancy Taxes
Toronto, Vancouver and Ottawa charge a tax on homes left empty, and each needs an annual declaration from owners wherever they live. The rates, exemptions and deadlines are on the vacant home tax page.
BC also charges a speculation and vacancy tax in designated areas, with a higher rate for foreign owners and an annual declaration for every owner. Its rates and exemptions are covered in the BC speculation and vacancy tax guide.
The Bottom Line
Non-resident property ownership in Canada carries tax obligations that need proactive management. For rental income, electing section 216 and filing an NR6 replaces withholding on gross rent with withholding on net rent, and tax on net income. When selling, the clearance certificate takes weeks to process, and without one the buyer is legally required to withhold 25%. A Canadian tax professional who works on non-resident taxation can help with both.
Tax Treaties
Treaties can lower some withholding rates, settle dual-residency cases with tie-breaker rules and give credits for tax paid in the other country. Canada has comprehensive treaties with the US and UK and treaties with Australia, India, China and many other countries; the withholding rates they set are listed in the non-resident tax guide.
Financing as Non-Resident
Non-resident buyers usually face larger down payments, higher rates and fewer lenders. The requirements and lenders are covered in the non-resident mortgage guide.