Owning a rental property in Canada while living somewhere else is common, and completely legal. What trips people up isn't the ownership, it's the tax mechanics. Canada taxes non-residents on Canadian rental income differently than it taxes residents, and the rules are built around one goal: making sure the CRA gets paid before the money leaves the country.
This guide walks through what changes when a non-resident owns Canadian rental property, why the 25% withholding rule defaults to your gross rent instead of your profit, and the three forms, NR6, NR4 and T1159, that determine how much you actually owe. Further down you'll find our free Non-Resident Withholding Calculator and a look at how Powerhouse handles all of this as your Canadian agent for $79 a month.
NR6, NR4 and T1159 at a Glance
| Form |
What It Does |
Filed By / Deadline |
| NR6 |
Requests CRA approval to withhold tax on your net rental income instead of gross |
You & your agent, as early as possible |
| NR4 |
Reports the rent paid and the tax withheld for the year |
Your agent, information return due March 31 |
| T1159 (Section 216) |
Reports actual rental income and expenses and settles your real tax bill |
You (CPA recommended), due June 30 with an approved NR6, or within 2 years without one |
Income Tax Act, Part XIII
Why the CRA Takes Its Cut Before You Do
Under Part XIII of the Income Tax Act, rental income paid to a non-resident from Canadian real property is subject to a flat 25% non-resident tax. Whoever pays you the rent, a tenant directly, or more commonly your property manager acting as your Canadian agent, must withhold that 25% and remit it to the CRA on or before the 15th day of the month following the month the rent was paid or credited. If they don't, the CRA charges compound daily interest on the amount owing and can add a penalty on top. You can review the rule directly on the CRA's filing and reporting requirements page.
The catch is that this 25% is calculated on your gross rent, not your profit. Mortgage interest, property tax, insurance, repairs and management fees don't come off first. On a property that's only lightly profitable after expenses, that can mean the CRA collects far more in withholding each month than you'd actually owe if you filed a full return.
For You
If your rental expenses are significant relative to your rent, the gross-withholding default is probably costing you real monthly cash flow. That's exactly what Form NR6 is designed to fix.
The 25% withholding isn't a penalty. It's a deposit, and you can get the excess back, or avoid overpaying it in the first place.
Form NR6
Lowers Your Monthly Withholding
Form NR6, the Undertaking to File an Income Tax Return by a Non-Resident Receiving Rent from Real or Immovable Property, is a joint undertaking you sign together with your Canadian agent. It asks the CRA for permission to withhold 25% of your net rental income, after expenses, instead of the gross amount.
It has to be filed for each tax year, on or before January 1, or before your first rental payment is due if you're starting partway through the year. Find the current form on the CRA's NR6 form page.
For You
Approval usually takes a few months, so this only helps if you or your agent file it before the year, or the rental period, begins.
Form NR4
Reports What Was Withheld
The NR4 slip, Statement of Amounts Paid or Credited to Non-Residents of Canada, is what your agent issues you each year showing the gross rent you were paid and the non-resident tax withheld on your behalf. It's the non-resident equivalent of a T4.
Your agent is also responsible for filing the NR4 information return with the CRA, due by March 31 of the following year. See the official form on the CRA's NR4 slip page.
For You
Keep every NR4 slip you receive. You'll need the totals on it to complete your Section 216 return.
Form T1159
Settles Your Actual Tax Bill
Form T1159, the Income Tax Return for Electing under Section 216, is how you report your actual rental income and expenses and get taxed at graduated rates on the net amount instead of a flat 25% on the gross. It's often what gets you a refund of over-withheld tax.
If your NR6 was approved for the year, this return is due by June 30 of the following year. Without an approved NR6, you generally have up to two years from the end of the rental year to file. See the CRA's T1159 form page and Guide T4144 for details.
For You
Miss the June 30 deadline on an approved NR6 and the election is voided. The CRA will then assess you on gross rent for the year, the exact outcome the NR6 was meant to prevent.
One practical note before you file anything: if you don't have a Canadian Social Insurance Number, you'll need an Individual Tax Number (ITN) instead to file an NR6 or a Section 216 return. Apply using the CRA's Form T1261. Processing typically takes 6 to 8 weeks, so start well before your NR6 or Section 216 deadline.
Residency & Responsibility
It's Not Just Where You Live, It's Who Pays You
Canadian residency status doesn't affect your right to own property here. It changes how your rental income is taxed and who is legally responsible for withholding tax on it. If you live outside Canada for tax purposes and earn rent from a Canadian property, that income falls under Part XIII of the Income Tax Act the moment it's paid or credited to you, not when you file a return the following spring.
By default, the person who pays you the rent has to withhold and remit the 25%. If a tenant pays you directly with no agent involved, the law technically puts that responsibility on the tenant. In practice, the CRA doesn't expect an ordinary residential tenant to track their landlord's residency status, and a legislative change effective August 12, 2024 formalizes an exception from withholding for individuals paying rent on a residence they live in. Once you use a property manager as your Canadian agent, that ambiguity disappears entirely: the withholding, remitting and NR4 reporting duties sit with the agent, not the tenant.
Non-resident status also doesn't touch your provincial landlord obligations. You're still bound by the same Residential Tenancies Act framework as any other Ontario landlord, including the 2026 RTA amendments and which Bill 60 deadlines are already in effect. And if a tenant stops paying, the process doesn't change either; see what to do if your tenant stops paying rent.
For You
If you're managing a tenant relationship directly from overseas, you carry the same withholding, remittance and penalty exposure as a Canadian agent, without the local presence to actually meet the deadlines.
Non-Resident Remittance Service
Your Canadian Agent, Without the Learning Curve
When you sign on as a Powerhouse client, we act as your Canadian agent for non-resident withholding. Our name goes on the NR6 undertaking alongside yours, we calculate and remit your monthly non-resident withholding to the CRA on the correct basis, gross by default, net once your NR6 is approved, and we issue your NR4 slip and file the NR4 information return by the March 31 deadline.
We coordinate directly with your accountant when it's time to file your annual Section 216 return, so the numbers on your NR4 match what goes on your T1159 without you chasing paperwork across time zones. This non-resident remittance service is $79 a month, on top of standard property management, and it replaces the guesswork of trying to track CRA deadlines from overseas.
For You
We're your property manager and your Canadian agent, not your accountant, so you'll still want a cross-border accountant for the Section 216 filing itself. Every number they need will already be correct, on time, and waiting for them.
Non-Resident Landlord FAQs
Do I have to pay tax on rental income from a Canadian property if I live outside Canada?
Yes. Rental income from Canadian real property is taxable in Canada under Part XIII of the Income Tax Act, regardless of where you live. By default, whoever pays you the rent, a tenant directly or your property manager acting as your agent, must withhold 25% of the gross rental income and remit it to the CRA.
What's the difference between filing an NR6 and not filing one?
Without an approved NR6, your agent withholds 25% of your gross rent every month, with no deduction for expenses. With an approved NR6, your agent can withhold 25% of your estimated net rental income instead, which is usually far less. Either way, you can file a Section 216 return to true up the actual number.
What happens if I don't file my Section 216 return (Form T1159) on time?
If the CRA approved your NR6 for the year and you miss the T1159 filing deadline, the NR6 election is voided retroactively and the CRA will assess tax on your full gross rental income for that year, the exact outcome the NR6 was meant to avoid.
Do I need a Canadian agent if I use a property manager?
Yes, and in practice your property manager is the Canadian agent. The NR6 undertaking is a joint filing between you and your agent, so your agent's name goes on the form and they take on the monthly withholding and remittance responsibility.
I don't have a Canadian Social Insurance Number. Can I still file these forms?
You'll need an Individual Tax Number (ITN) instead of a SIN. You apply using Form T1261, and the CRA typically takes 6 to 8 weeks to issue one, so it's worth applying well before your first NR6 or Section 216 filing deadline.
Will using a property manager remove the tax withholding responsibility from my tenant?
Yes. Once your property manager is on file as your Canadian agent, the withholding, remittance and NR4 reporting responsibility sits with them, not your tenant. That matters both for your own compliance and for your tenant's peace of mind.
Need Help Managing This Across the GTA?
Speak With Powerhouse
Ask about compliance, rent collection, tenant placement and full-service property management.
The Bottom Line
If you're a non-resident who owns a rental property in Canada, the CRA's default position is to withhold 25% of your gross rent before you see a cent of it. That's legal, it's automatic, and it's usually more than you actually owe once your expenses are counted.
Form NR6 fixes the cash flow problem by letting your agent withhold on net income instead of gross. Form NR4 documents what was withheld. Form T1159, your Section 216 return, is where the real number gets settled and any overpayment comes back to you. Miss a deadline on any of the three and you can end up back on the gross-withholding default for the year.
At Powerhouse Management, our non-resident remittance service handles the agent role, the monthly withholding and the NR4 filing for $79 a month, so your property stays compliant no matter which time zone you're in.