Canadian real estate has long attracted international investors. But before you sign that purchase agreement, understanding the tax landscape can save you from costly surprises.
The Purchase Phase
When buying property in Canada as a non-resident, you'll encounter:
Land Transfer Tax
Varies by province. Ontario and Toronto have additional municipal taxes.
Non-Resident Speculation Tax
25% tax in Ontario for foreign buyers (with some exemptions).
The Rental Phase: Where NR6 Comes In
Once you start earning rental income, the 25% withholding tax kicks in:
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Without NR6
Your property manager must withhold 25% of gross rent monthly.
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With NR6
Withholding is based on net income after expenses.
The Sale Phase
When you sell Canadian property as a non-resident:
- 25% withholding on sale proceeds by the buyer's lawyer
- Certificate of Compliance (Section 116) required
- Capital gains tax on the profit from sale
Planning for Success
- Consult a cross-border tax professional
- Understand all applicable taxes before buying
- Plan to file NR6 from day one of rental income
- Set up proper Canadian banking
- Consider tax implications in your home country
