Short answer
By default, 25% of gross rent is withheld and remitted monthly. A Section 216 return taxes net income instead — usually far less — and an NR6 undertaking lets your agent withhold on expected net income from the first cheque.
The default: 25% of gross
Rent paid to a non-resident is Part XIII income: the payer or Canadian agent must withhold 25% of gross rent and remit it by the 15th of the following month, reporting the year on an NR4 slip by March 31. Gross means gross — mortgage interest, property tax, condo fees and repairs do not reduce it.
The liability sits with the withholder: an agent or tenant who fails to withhold owes the tax personally, plus interest and penalty. This is why property managers insist on the paperwork.
Section 216: tax on net income instead
Filing a Section 216 return converts the flat gross-rent withholding into ordinary tax on net rental income — after expenses and capital cost allowance. For a leveraged property the difference is dramatic: many owners recover most of what was withheld.
The deadline is two years after the year-end — or June 30 of the following year when an NR6 undertaking is in place. The NR6, approved before the year starts, authorizes withholding on projected net income rather than gross rent, fixing cash flow instead of refunding it later.
Selling the property
A non-resident selling Canadian real estate needs a Section 116 clearance certificate; without it, the buyer withholds 25% of the full purchase price (not the gain). The certificate process, the final T1 reporting the gain, and any Section 216 history need to reconcile — mismatched CCA claims are the classic audit trigger.
Reviewed for the 2025 tax year by Udit Gupta, Cross-Border Tax Expert, Legal Quotient Consultants.
General information, not advice for your specific situation —
contact us on the 24-hour helpline to discuss your circumstances.
