Non-Resident Real Estate Owners
Acting as a real estate owner in Canada can be a profitable and rewarding experience if you are well-informed on the tax implications of every step of owning the property. The experts at Capital Tax are proficient in Canadian tax laws and prepared to guide non-residents in paying the appropriate taxes at each point of the ownership lifecycle.
If you are a non-resident buying a property in Canada:
Capital Tax can assist you in determining the provincial transfer tax that you will need to pay if you are a non-resident buying a property in Canada. While the amount of the provincial transfer tax is different in some provinces, it may be around 1% on the first $200K and 2% on the remainder.
There are some exemptions if this is your first property purchase in Canada.
If you are a non-resident renting out a property in Canada:
Capital Tax is equipped to guide non-residents in the appropriate method for paying taxes on a rental property in Canada. Please contact Capital Tax if you have questions on how you should be filing your taxes on your Canadian rental property.
Non-residents who rent out a property in Canada pay a 25% withholding tax on gross income. This is withheld by an agent in Canada – usually the renter or property manager. The payment of this tax is usually the non-resident’s final tax requirement to Canada on the rental income.
However, non-residents can elect under section 216 of the Income Tax Act. In doing this you are sending a separate Canadian tax return to report rental income from your Canadian property. This is beneficial in most cases because you can pay tax on your net rental income as opposed to the gross amount. Capital Tax can assist you in electing under section 216 for one or more properties.
If you are a non-resident selling a property in Canada:
Capital Tax is prepared to assist you in calculating and remitting payment of taxes on the sale of a Canadian property. Non-residents of Canada selling a Canadian property are required to pay 50% of a capital gain as a withholding tax. A U.S. resident must report this to the IRS. The buyer of the Canadian property must be provided (from the seller) a clearance certificate prepared by the CRA. This certificate outlines that there are no outstanding tax issues with the property.
Capital Tax understands that it can be complicated for non-residents earning income from the rental of Canadian real estate to figure out the taxes due. Our tax experts are set to assist in calculating Canadian tax on rental investments.
Contact us today for more information and get a free quote!