I moved abroad but kept my Canadian rental — is 25% of the gross rent really withheld?
Yes. By default, your Canadian agent (or tenant, if no agent) must withhold 25% of the gross rent every month and remit it to CRA — with no deduction for mortgage interest, condo fees, or any other expense. The withholding is reported on an NR4 slip. If your expenses are high, this usually over-withholds, which is why the Section 216 election exists.
How it works
| Item | Detail |
|---|---|
| Withholding rate | 25% of gross rent |
| Who withholds | Your property manager, or the tenant directly if you have no agent |
| Remittance | Monthly, by the 15th of the following month |
| Slip | NR4 issued to you each year |
| Agent liability | If the agent fails to withhold, CRA can assess the agent personally |
Example: $2,500/month rent with $1,800 mortgage interest + $400 condo fee = $2,200 expenses. Default withholding: $625/month ($2,500 × 25%). Your real profit is only $300 — so you're prepaying tax on money you never earned.
The fix: Section 216 return
File a Canadian tax return under Section 216 (due June 30) reporting the net rental income. CRA taxes the net amount at your marginal rate and refunds the difference between the 25%-of-gross withheld and the actual tax. Most non-resident landlords with mortgages get a refund every year.
Frequently asked questions
Can my tenant really be on the hook for withholding?
Yes. If there is no Canadian agent, the tenant is legally required to withhold and remit. Most tenants have no idea — which is exactly why having an agent matters.
Does the 25% rate drop under a tax treaty?
For rental income, no — treaties generally leave Canada's 25% rental withholding intact. The relief comes from the Section 216 net-basis filing, not the treaty.
I have an NR6 approved — does Section 216 still apply?
Yes. NR6 only changes the withholding base from gross to net; you must still file the Section 216 return.
Sources
- https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/rental-income-non-resident-tax/filing-reporting-requirements.html (CRA)