Moved Away but Still Renting Out Your Canadian Property: NR6 and Section 216
Updated: 2 hours ago
Once you're a non-resident of Canada, 25% of the gross rent must be withheld and sent to the CRA every month, unless you file Form NR6 and then a section 216 return each year to be taxed on net income instead. The same rental also goes on your U.S. return.
Before the year starts: Form NR6. Withhold 25% of net rent, by January 1.
After the year ends: Section 216. T1159 on net income, by June 30.
United States: 1040 + Sch. E. Credit for Canadian tax, by April 15.
Leaving Canada: what happened to the rental
Canada treats most of your assets as sold on the day you leave, but Canadian real estate is excluded. Your rental wasn't taxed when you moved.
If the property was your home and you started renting it when you left, that change of use is treated as a sale at market value, and the principal residence exemption usually covers the years you lived there. An election under subsection 45(2), filed with your departure return, can defer this, but it has limits for non-residents. From your departure date on, the rules below apply to every rent payment.
The default: 25% of gross rent (Part XIII tax)
Rent paid to a non-resident is taxed at 25% of the gross rent, before any expenses. The Canada-U.S. treaty doesn't reduce this rate for real estate.
Who withholds: The person paying the rent. With a property manager or other Canadian agent, the agent withholds. If your tenant pays you directly, the tenant is legally responsible, which few tenants know. Most owners appoint a Canadian agent.
When it's remitted (15th of next month): The withheld tax is due by the 15th of the month after the rent is paid, under a non-resident withholding account the agent opens with the CRA.
NR4 slips (March 31): The agent files an NR4 summary and gives you an NR4 slip showing the gross rent and tax withheld.
25% of gross is usually far more than the tax you owe once mortgage interest, property tax, insurance and repairs are deducted. That's what Form NR6 and the section 216 return fix.
Form NR6: withholding on net rent instead
The formula: (rent − expenses the agent pays) × 25% = monthly withholding
In exchange, you promise to file a section 216 return for that year.
Who signs it: You and your Canadian agent, who must be a Canadian resident and agree to withhold and remit for you.
What goes on it: Estimated rent and expenses: mortgage interest, property tax, strata fees, insurance, utilities, repairs, management fees. Not CCA.
When it's due: By January 1, or before the first rent payment if the rental starts later. A new NR6 every year.
After approval: The agent withholds 25% of net rent monthly, remits by the 15th, and issues an NR4 slip by March 31.
The section 216 return (Form T1159)
A separate Canadian return reporting only your rental income. It replaces the flat 25% with tax on your actual net income, and the CRA refunds any excess withheld.
Due June 30 of the following year, if you filed Form NR6 for that year.
Due within 2 years after the year-end, if you didn't file Form NR6 and 25% of gross rent was withheld.
How it's taxed: Federal graduated rates plus a 48% non-resident surtax in place of provincial tax. Most personal credits aren't allowed. For a typical rental, the result is still far below 25% of gross rent.
Capital cost allowance: You can claim CCA, but it can't create a loss, and it's taxed back as recapture when you sell. If you claim it, you must also file a section 216 return for the year you sell.
Joint owners: a couple owning 50-50
The CRA treats each co-owner as a separate taxpayer. A couple owning a rental 50-50 is two non-residents, each with half the rent, half the expenses and their own filings.
Own Form NR6: Each owner signs one, showing their share of estimated rent and expenses.
Own NR4 slip: For their share of the gross rent and tax withheld.
Own section 216 return: Reporting their share of income and expenses.
Split by ownership: Income and expenses follow the ownership on title. On a 50-50 property, you can't put all the expenses on one spouse's return.
A tax number for each (SIN · T1261): Every owner needs their social insurance number, or an individual tax number applied for on Form T1261.
Only one files an NR6: That owner's share is withheld at 25% of net. The other's share stays at 25% of gross until they file their own.
One spouse stays in Canada: Only the non-resident's share is subject to withholding. The resident spouse reports their half on a regular T1 with Form T776.
Daniel and Maya, 50-50 (C$)
Rent: Daniel 15,000 · Maya 15,000 · Couple 30,000
Expenses: Daniel 9,000 · Maya 9,000 · Couple 18,000
Net rental income: Daniel 6,000 · Maya 6,000 · Couple 12,000
Withheld with NR6 (25% of net): Daniel 1,500 · Maya 1,500 · Couple 3,000
Tax on each 216 return: Daniel ≈ 1,245 · Maya ≈ 1,245 · Couple ≈ 2,490
The agent issues two NR4 slips, one each for C$15,000 of gross rent, and each spouse files a separate section 216 return.
Remitting the withholding tax
The agent, not the owners, is responsible for sending the tax to the CRA.
Open an account. The agent registers a non-resident withholding tax account with the CRA before the first remittance.
Withhold each payment. 25% of gross, or 25% of net once the NR6 is approved, calculated separately for each owner's share.
Remit by the 15th of the month after the rent is collected, by online banking, CRA My Payment or remittance voucher.
Report by March 31. File the NR4 summary and give each owner an NR4 slip for the previous year.
Late or missed remittances. The CRA can charge a 10% penalty (20% for repeated failures) plus daily compound interest. The agent is liable, and the owners are also liable for their own tax. A property manager used to non-resident owners usually has this set up; a relative or friend acting as agent often doesn't, so confirm it before the first rent is paid.
If you didn't file Form NR6: what happens
Missing Form NR6 isn't a penalty in itself. It means the full 25% of gross rent should have been withheld. What happens next depends on whether it was.
No NR6, agent withheld 25% of gross (overpaid): You've overpaid, but nothing is wrong. How to fix it: File a section 216 return within 2 years of the year-end. After 2 years, the 25% on gross is final.
NR6 filed late in the year (partly): The CRA generally applies it only from the month it's received. How to fix it: Earlier months stay at 25% of gross; recover the excess through the section 216 return.
NR6 filed, no section 216 return by June 30 (broken promise): The agent owes the difference up to 25% of gross rent, plus interest. How to fix it: The CRA may refuse your future NR6s. File the return as soon as possible.
Nothing withheld, tenant paid you directly (liable): The tenant or agent owes the 25%, plus a 10% penalty (20% if repeated) and interest. You're liable too. How to fix it: Catch up using the steps below.
Catching up when nothing was withheld
Have the agent open a non-resident withholding account and remit the Part XIII tax owed for past years.
File the missing NR4 slips and summaries.
File section 216 returns for every year still within the 2-year window, to be taxed on net income.
Consider the CRA's Voluntary Disclosures Program, which can reduce penalties and some interest if you come forward first.
Years outside the 2-year window generally stay taxed at 25% of gross rent, which is why acting quickly matters.
Worked example: a Surrey condo
Daniel moved to Seattle and rents out his Surrey condo through a property manager. In 2026 it earns C$30,000 in rent, with C$18,000 of expenses, for C$12,000 of net rental income.
No NR6, 216 return filed: Withheld during the year 7,500 (25% of gross) · Tax on section 216 return ≈ 2,490 · Refund ≈ 5,010 after filing · Final Canadian tax ≈ 2,490
NR6 + 216 return: Withheld during the year 3,000 (25% of net) · Tax on section 216 return ≈ 2,490 · Refund ≈ 510 · Final Canadian tax ≈ 2,490
No NR6, no 216 return: Withheld during the year 7,500 (25% of gross) · Tax on section 216 return: not filed · Refund: none · Final Canadian tax 7,500
The takeaway: Form NR6 keeps about C$4,500 in Daniel's pocket during the year instead of waiting for a refund. Skipping the section 216 return costs him about C$5,000 a year.
C$, rounded and illustrative: C$12,000 × 14% federal rate = C$1,680, plus the 48% surtax of about C$805. No CCA.
Your U.S. return
As a U.S. resident you're taxed on worldwide income, so the Canadian rental goes on your Form 1040 too. In the year you moved, you usually file a dual-status return.
Schedule E: Report rent and expenses in U.S. dollars, at each transaction's rate or the yearly average.
Depreciation (30 years): A rental outside the U.S. uses straight-line depreciation over 30 years (placed in service after 2017). It reduces your U.S. cost on a sale whether or not you claim it.
Foreign tax credit (Form 1116): The credit is for your final tax on the section 216 return, not the amount withheld, since the excess is refunded. One more reason to file it.
Canadian accounts (FBAR): The bank account where rent is deposited is reportable if your foreign accounts total more than $10,000 USD, and may count toward Form 8938. The property itself isn't reported on either.
State tax: States with an income tax generally tax the rental too. Washington has none.
Selling the property later
When a non-resident sells Canadian real estate, the CRA collects its tax before the money leaves the country.
Clearance certificate (10 days): Notify the CRA on Form T2062 (plus T2062A for the building) no later than 10 days after the sale, and pay or secure tax on the estimated gain.
Buyer's holdback: Until the certificate arrives, the buyer's lawyer holds back 25% of the price for land, and up to 50% for the building portion.
In the year of sale, file a non-resident Canadian return reporting the capital gain (half taxable) and any CCA recapture. On your Form 1040, report the sale in U.S. dollars and claim a credit for the Canadian tax; under the treaty, Canada taxes Canadian real estate first.
Your forms checklist
By January 1 (Canada) — NR6: Each owner + agent. Withholding on net rent.
15th monthly (Canada) — Part XIII: Agent. Remits last month's withholding.
By March 31 (Canada) — NR4: Agent. Slip and summary of rent and tax withheld.
By June 30* (Canada) — T1159: You. Section 216 return; refunds excess withholding.
By April 15 (U.S.) — 1040 + Sch. E: You. Worldwide income, with Form 1116 credit.
April 15 / Oct. 15 (U.S.) — FBAR: You. Canadian accounts over $10,000 USD.
10 days after sale (Canada) — T2062 / A: You. Clearance certificate on the sale.
* Within 2 years after the year-end if you didn't file Form NR6.
Talk to Icantax
We file your NR6, work with your property manager on the withholding, prepare your section 216 and U.S. returns together, and clean up past years where nothing was withheld, before the 2-year window closes.
Call 604-496-2200 or email info@icantax.ca — Unit 110 - 13575 107A Avenue, Surrey, B.C.
General information, not tax advice for your situation.Content coming soon.
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