Section 216 for Non-Resident Canadian Landlords (NR4 vs. Net Rent)
If you live outside Canada and own Canadian rental property, the default tax treatment is brutal: 25% of every gross rent dollar withheld and remitted to CRA monthly via NR4. The Section 216 election is how you fix that — but it requires a deliberate annual filing.
The default (no election)
25% of gross rent withheld by your Canadian agent each month, remitted to CRA on form NR4. No deductions, no expense recognition. Most non-resident landlords end up overpaying by 30-50%.
Form NR6 — switch to net-rent withholding
File NR6 jointly with your Canadian agent BEFORE Jan 1 of the year you want net-rent treatment. The agent then withholds 25% of estimated NET rent (gross minus reasonable expenses) instead of 25% of gross. CRA approves these by mid-Feb each year.
Section 216 election (T1159)
Annual filing by June 30 of the year after the rental year. Reports actual income + expenses and reconciles to the withholding. The catch — you must file every year you elect, OR you lose the protection.
Sale of the property — Section 116 clearance
When you sell, the buyer's lawyer holds back 25-50% of the proceeds until you produce a Section 116 Certificate of Compliance from CRA. Apply for the certificate within 10 days of closing.
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Start free trialCommon questions
QWhat's the deadline to file rental income to the CRA?
Rental income is reported on the T776 form filed with your personal T1 return. The deadline is April 30 of the year after you earned the income (June 15 if you're self-employed, but any balance owing is still due April 30).
QDo I need to charge GST/HST on rent?
Long-term residential rent is GST/HST-exempt. Short-term rentals (under 30 days) are taxable once you exceed the $30,000 small-supplier threshold across all your business activities.
QCan I deduct mortgage payments?
You can deduct the interest portion (and most carrying costs) of your mortgage on a rental property, but NOT the principal repayment. Central Rentals splits this automatically inside your T776 export.