Canada non-resident property tax: Buying, owning, and selling
Canada has no single nationwide “non-resident property tax.” A foreign owner can face individual buyer-tax rates of 10%–25%, annual municipal or vacancy taxes, 25% rental withholding, and Section 116 sale withholding. US citizens also report worldwide rental income and gains on their 2025 US returns filed in 2026.
Canada non-resident property tax: what does it cover? The answer depends on the property’s province and city, how it is used, and whether the owner rents or sells it. US citizens and resident aliens abroad generally remain within the US worldwide-income system, even when Canada also taxes the same rent or gain.
A Canadian property can create Canadian filing obligations without making the owner a Canadian tax resident. Review TFX’s US tax guide for Americans in Canada, compare Canadian and American tax rules, and see how the IRS treats foreign property held by US taxpayers.
The main decision rule is that each of the 4 property stages can create a different Canadian charge and a separate US consequence.
| Stage | Possible Canadian tax | Rate or mechanism | Common US consequence |
|---|---|---|---|
| Buying | Provincial or municipal transfer tax; foreign-buyer tax; GST/HST on some new homes | Ontario NRST 25%; B.C. additional tax 20%; Toronto MNRST 10% | Usually no immediate federal income-tax deduction; establish USD tax basis |
| Owning | Municipal property tax; local or provincial vacancy tax | Based on assessed value; Toronto and Vancouver vacancy taxes are 3% for 2025, while B.C.’s provincial speculation and vacancy tax is 2% for foreign owners for 2025 and increases to 3% for 2026 | Property tax may be deductible only under the rules for rental or business use |
| Renting | Part XIII withholding and optional Section 216 return | Default 25% of gross rent; approved NR6 can permit 25% withholding on net rent | Schedule E income, expenses, US depreciation, and possible Form 1116 credit |
| Selling | Section 116 purchaser holdback and final Canadian income tax | Commonly 25% of gross proceeds without a certificate; 50% can apply to specified property | Form 8949/Schedule D or Form 4797; possible Section 121 exclusion and Form 1116 credit |
Can a non-resident or US citizen own property in Canada?
Yes. Ownership, permission to make a new purchase, and tax residency are 3 separate questions. A non-resident can continue owning Canadian property, but the federal purchase ban may block a new residential acquisition through January 1, 2027. Ownership alone does not automatically create Canadian tax residence.
For Canadian income-tax purposes, residency turns mainly on residential ties, including a home available for use, a spouse or common-law partner, and dependants in Canada. Citizenship, permanent-resident status, and immigration permission are relevant facts, but they do not by themselves decide Canadian tax residency.
A person can fall into 3 different statuses at the same time, so each column must be tested separately.
| Status | What it decides | Property-tax effect |
|---|---|---|
| Canadian citizenship or immigration status | Whether the person is a citizen, permanent resident, temporary resident, or protected person | Can determine federal purchase-ban and provincial foreign-buyer-tax treatment |
| Canadian tax residency | Whether Canada taxes worldwide income or only specified Canadian-source income | Owning a home is a residential tie, but no single tie automatically decides every case |
| US tax status | Whether the person is a US citizen, green card holder, or resident alien | US worldwide-income reporting can continue even when the owner lives in Canada |
US citizen owning property in Canada tax: what changes? The deed itself does not create a separate US property tax. The US consequences begin with the use of the property – rental income, deductible expenses, depreciation, a later sale, foreign accounts, or ownership through a Canadian entity.
For filing context, see TFX’s US tax preparation guide for Canada, US–Canada dual-citizenship tax guide, and explanation of US citizenship-based taxation.
Can foreigners buy residential property in Canada in 2026?
Not always. The federal prohibition still blocks many non-Canadians from buying covered residential property in a census metropolitan area or census agglomeration until January 1, 2027. Buildings with 4 or more dwelling units, vacant land, qualifying purchasers, and specified transactions can fall outside the ban.
The federal extension through January 1, 2027 covers direct and indirect purchases of houses, condominium units, and buildings with up to 3 dwelling units in specified urban areas. A purchase outside a CMA or CA can be outside the prohibition, but provincial and municipal transfer taxes still need separate review.
Non-resident tax buying property in Canada: what applies? Purchase eligibility comes first. A buyer who qualifies under the federal Act can still owe Ontario’s 25% NRST, B.C.’s 20% additional property transfer tax, Toronto’s 10% MNRST, and ordinary transfer taxes if the separate provincial or city definitions apply.
The following 6 yes-or-no steps form a practical federal eligibility flowchart:
- Are you a Canadian citizen, permanent resident, or person registered under the Indian Act? If yes, the federal prohibition does not treat you as a non-Canadian.
- Is the property outside a CMA or CA, vacant land, or a building with at least 4 dwelling units? If yes, the federal prohibition may not cover the property.
- Is the acquisition caused by death, divorce, separation, or gift, or made by a secured creditor? If yes, the transaction may be excluded.
- Is the property being acquired for development? If yes, the development exception may apply.
- Do you qualify as a protected person, qualifying temporary resident, or eligible spouse or common-law partner? If yes, confirm the detailed conditions.
- Did every prior answer remain no? If yes, the purchase is generally prohibited until January 1, 2027.
Read TFX’s 2026 US tax guide for Canada before choosing an ownership structure. Americans considering a long stay should also review retiring in Canada as an American and the US tax effects of buying foreign real estate.
Who is exempt from Canada’s foreign-buyer ban?
The 2026 rules contain several person-based and transaction-based exceptions, but there is no 1 blanket “US citizen” exemption. A qualifying work-permit holder, protected person, eligible spouse, or buyer in an excluded transaction may proceed only when every condition in the current Act and regulations is met.
The following 6 categories cover the main exceptions and exclusions, but the list is not exhaustive:
- Qualifying temporary residents studying in Canada who meet the tax-return, physical-presence, prior-purchase, and purchase-price conditions.
- Qualifying temporary residents working in Canada who hold valid work authorization and meet the remaining work-permit conditions.
- Protected persons and individuals granted qualifying temporary status after fleeing conflict.
- Certain non-Canadian spouses or common-law partners purchasing with an eligible Canadian, permanent resident, registered person, or exempt non-Canadian.
- Acquisitions resulting from death, divorce, separation, gift, or a creditor enforcing security.
- Purchases for development and covered residential property located outside specified CMAs and CAs.
The work-permit exception can require at least 183 days remaining on the permit or work authorization on the purchase date and no prior residential purchase during the prohibition period. Verify the purchaser and property against the current federal regulations before signing.
A purchaser planning retirement should compare the immigration and tax issues in TFX’s American retirement guide for Canada. Dual nationals should check the separate rules in the US–Canada dual-citizenship tax guide.
What taxes do non-residents pay when buying property in Canada?
A non-resident buyer can face 4 acquisition-tax layers: ordinary provincial transfer tax, municipal transfer tax, GST/HST on some new or substantially renovated homes, and a special foreign-buyer tax. The province, city, purchase price, property type, ownership percentage, and buyer status determine which amounts apply.
Tax on foreigners buying property in Canada: what can stack? Ontario and B.C. impose the best-known provincial foreign-buyer charges, while Toronto adds a city-level 10% MNRST. GST/HST can also apply to a new or substantially renovated home, although a rebate depends on use, price, agreement date, and other eligibility conditions.
The key buying rule is that a foreign-buyer charge can sit on top of ordinary transfer tax, and Toronto can add 2 more municipal layers.
| Location | Ordinary transfer tax | Special non-resident charge | 2026 point to check |
|---|---|---|---|
| Ontario outside Toronto | Provincial land transfer tax | 25% NRST for affected purchases | Exemptions and rebates have detailed occupancy and status conditions |
| Toronto | Ontario LTT plus Toronto MLTT | 25% Ontario NRST plus 10% Toronto MNRST for affected purchases | Toronto’s revised high-value MLTT rates took effect April 1, 2026 |
| Specified B.C. regions | B.C. property transfer tax | 20% additional property transfer tax on the foreign buyer’s proportionate share | A refund can depend on later citizenship or permanent residency and strict deadlines |
| Other provinces | Provincial land or property transfer tax varies | No single nationwide foreign-buyer tax | Check the province, municipality, property type, and federal purchase ban |
Consult Ontario’s land transfer tax rules and B.C.’s property transfer tax guidance before calculating closing funds.
TFX’s guides to buying foreign real estate, US tax on foreign property, and Canadian versus American taxes explain the US side.
Ontario Non-Resident Speculation Tax: 25%
Ontario’s NRST equals 25% of the consideration for an affected residential purchase anywhere in the province. It applies in addition to land transfer tax. A foreign purchaser can expose the full property value to NRST in some joint-purchaser situations, even with a smaller ownership share.
The tax generally targets foreign nationals, foreign corporations, and taxable trustees acquiring an interest in residential property. Exemptions can apply at registration to limited groups, while rebates or refunds may require later events and deadlines; do not treat permanent-residence plans as an automatic closing exemption.
Based on our client scenario at TFX: A foreign buyer purchases an Ontario home outside Toronto for CAD 800,000. The 25% NRST is CAD 200,000. Ordinary Ontario LTT is CAD 12,475, producing CAD 212,475 of provincial acquisition tax before legal fees, registration costs, and any GST/HST.
If the same affected purchase closes in Toronto, the city’s 10% MNRST adds CAD 80,000, and ordinary Toronto MLTT is about CAD 12,475 at that price. Combined provincial and city acquisition taxes would be about CAD 304,950 before other closing costs.
Review the official Ontario NRST rules, NRST exemptions, and NRST rebates and refunds.
TFX also explains foreign real-estate purchases and Canada–US tax differences.
British Columbia additional property transfer tax: 20%
B.C.’s additional property transfer tax is 20% of a foreign entity’s or taxable trustee’s proportionate residential-property share in 5 specified regions. Ordinary B.C. property transfer tax also applies. Unlike Ontario’s joint-purchase rule, B.C. generally calculates the additional charge using the foreign buyer’s ownership share.
The following 5 regions are covered by the additional tax:
- Capital Regional District
- Fraser Valley Regional District
- Metro Vancouver Regional District
- Regional District of Central Okanagan
- Regional District of Nanaimo
Based on our client scenario at TFX: A full foreign owner buys a CAD 800,000 covered residence. The 20% additional tax is CAD 160,000, and ordinary B.C. property transfer tax is CAD 14,000. The 2 provincial transfer taxes total CAD 174,000 before other costs.
Exemptions and refunds are fact-specific. One route can apply when a foreign national becomes a Canadian citizen or permanent resident within 1 year, moves into the home within 92 days, occupies it as a principal residence for the required period, and applies within the prescribed window.
See B.C.’s official additional property transfer tax, ordinary property transfer tax, and property transfer tax exemptions.
TFX provides more context on buying property abroad and US tax on foreign real estate.
Annual property taxes and vacancy taxes for non-resident owners
Non-residents normally pay annual municipal property tax using the municipality’s assessed value and rate. For 2025, separate vacancy taxes can reach 3% in Toronto and Vancouver, while B.C.’s provincial speculation and vacancy tax is 2% for foreign owners. For 2026, B.C.’s provincial rate increases to 3%. Federal UHT filing and payment ended for 2025 and later years.
2026 UHT update: Canada’s 1% federal Underused Housing Tax still matters for unresolved 2022, 2023, and 2024 obligations, but affected owners do not file a UHT return or pay UHT for 2025 or later years. The change received royal assent on March 26, 2026.
TFX’s foreign property tax guide and US tax guide for Canada cover the US return.
Canadian tax on rental property owned by a non-resident
Canada generally requires 25% withholding from gross rent paid or credited to a non-resident. An approved Form NR6 can permit 25% withholding on estimated net rent, followed by a Section 216 return. For an approved 2025 Form NR6, an individual’s return was due June 30, 2026, but any balance owing was due April 30, 2026. If the owner disposed of rental property in 2025 for which CCA had previously been claimed and reported CCA recapture, the Section 216 return itself was also due April 30, 2026.
A Canadian resident agent normally withholds, remits the tax by the 15th day of the following month, and issues an NR4 slip. Until the CRA approves Form NR6 in writing, the agent must continue withholding from gross rent rather than estimated net income.
The following 7 expense categories can reduce net rental income when properly connected to the property and allowed under Canadian rules:
- Property-management and agent fees
- Mortgage interest, but not principal
- Municipal property tax
- Insurance
- Repairs and maintenance, excluding capital improvements
- Utilities paid by the owner
- Professional fees and other qualifying operating costs
Based on our client scenario at TFX: A non-resident receives CAD 36,000 of gross 2025 rent and pays CAD 18,000 of qualifying expenses. Gross withholding is CAD 9,000. With an approved NR6, estimated net-rent withholding is CAD 4,500, subject to the final Section 216 return.
Use the official Form T1159 page. For the US return, read TFX’s foreign rental income guide, and our explanation of where foreign income appears on Form 1040.
How US citizens report Canadian rental income
US citizens generally report Canadian rent on Schedule E for the 2025 US return, even when cash stays in Canada. A Canadian residential rental building generally must be depreciated under the alternative depreciation system (ADS) – over 30 years if placed in service after 2017, or generally 40 years if placed in service before 2018. Canadian income tax can support a limited Form 1116 credit.
Translate rent and expenses into US dollars using a consistent, supportable method. Depreciation requires a USD basis, land is not depreciable, and Canadian capital cost allowance can differ from US depreciation in timing, class, recapture, and the amount claimed.
The recurring mismatch is that Canada and the US can tax the same rent using different depreciation and currency calculations.
| Canadian obligation | US obligation | Common mismatch |
|---|---|---|
| 25% Part XIII withholding from gross rent unless approved NR6 treatment applies | Report gross rent and expenses on Schedule E | Canadian withholding is not the same as US taxable rental profit |
| Section 216 election can tax net rent | Claim US rental deductions under US rules | An expense allowed in Canada may be capitalized or limited in the US |
| CCA may be claimed under Canadian rules | Depreciate the building under ADS – generally over 30 years if placed in service after 2017, or 40 years if placed in service before 2018 | CCA and US depreciation amounts rarely match |
| Canadian income tax can be paid on final net income | Test Form 1116 for a foreign tax credit | The credit is limited and currency timing can create a residual US tax |
See the IRS Publication 527. TFX explains foreign rental reporting, and foreign income placement on Form 1040.
What happens when a non-resident sells property in Canada?
Canadian real estate is generally taxable Canadian property, so Section 116 applies before the final income-tax calculation. A seller can notify the CRA at least 30 days before closing or within 10 days after an actual disposition. Missing the 10-day deadline can trigger a CAD 25-per-day penalty.
The seller handles CRA notification and the final Canadian return. The buyer and closing lawyer or notary protect the buyer from Section 116 liability by checking the certificate, retaining the required amount, and remitting when necessary.
Non-resident tax on sale of property in Canada: what happens at closing? Without a certificate of compliance, the purchaser may hold back 25% of gross proceeds for common capital-property sales. The amount held at closing is security for Canada, not the seller’s final capital-gains liability.
The following 6-step sale timeline covers every required action:
- Obtain a Canadian individual tax number if one is needed.
- Notify the CRA of the proposed disposition, preferably at least 30 days before closing.
- Submit Form T2062 for the capital gain or loss. For depreciable taxable Canadian property, also submit Form T2062A for CCA recapture or terminal loss; both forms may be required.
- Arrange the required payment or acceptable security.
- Obtain the Section 116 certificate and provide it to the purchaser’s lawyer or notary.
- File the Canadian income-tax return to calculate final tax and claim any refund.
Review the CRA’s taxable Canadian property sale process. TFX covers US tax on foreign-property gains, Canadian capital gains, and foreign property tax rules.
Canada non-resident property sale withholding tax rate
The Section 116 sale withholding rate is commonly 25% of gross sale proceeds when the seller lacks a certificate, not 25% of the gain. A 50% purchaser-liability rate can apply to specified property, including certain depreciable real property and inventory situations.
For a rental property containing land and a depreciable building, the legal allocation can affect whether 25%, 50%, or both mechanisms matter. Form T2062A addresses specified depreciable property, while the certificate process can limit the buyer’s exposure and reduce the closing holdback.
A certificate can replace a 25% gross-proceeds holdback with a smaller amount tied more closely to the Canadian gain, but only the final return establishes the tax.
| Sale stage | Purchaser’s position | Seller’s result |
|---|---|---|
| No certificate by closing | Generally retain and remit 25% of gross price for common capital property; 50% can apply to specified property | Large cash holdback even when the economic gain is small |
| Certificate obtained | Buyer’s liability is limited by the certificate amount and statutory rules | Holdback can fall because CRA has accepted payment or security |
| Final Canadian return filed | Withholding is credited against assessed tax | Seller receives a refund or pays the remaining balance |
The certificate calculation and final-return calculation are not identical. CRA guidance states that selling costs are not deducted in the certificate calculation, even though qualifying selling costs can reduce the final capital gain.
Consult the CRA non-resident disposition page. TFX also explains foreign-property capital gains, and capital gains rules for expats.
Is the 25% withholding the final Canadian tax?
Usually not. The 25% amount protects the CRA and is credited as a payment on account. Final Canadian tax depends on the gain, adjusted cost base, allowable selling costs, applicable inclusion rate, recapture, and the seller’s tax position. Filing can produce a refund or balance due.
Do not describe the 25% holdback as Canada’s capital-gains tax rate. It is a purchaser-liability mechanism calculated from gross proceeds in the no-certificate case, while the return applies income-tax rates to taxable income after the gain and other required adjustments are calculated.
A 2025 disposition generally uses a 50% capital-gains inclusion rate because the planned increase was cancelled and the CRA reverted to the enacted one-half rate. Recheck the law for a later sale date before filing.
See the CRA’s line 12700 guidance and non-resident income-tax guide. TFX’s foreign-property sale guide, and expat capital-gains article add cross-border context.
How Canada calculates a non-resident’s property capital gain
Canada calculates a property gain as proceeds minus adjusted cost base and qualifying selling costs. For a 2025 capital property sale, 50% of the gain is generally taxable. A rental building can create capital cost allowance recapture, while dealer or flipping facts can produce fully taxable business income.
Capital gains tax property Canada non-resident: what is taxable? The owner first identifies the property’s character. Adjusted cost base can include the purchase price and qualifying acquisition or capital-improvement costs, while selling costs can include qualifying commissions and legal fees.
The basic formula is:
Proceeds of disposition – adjusted cost base – qualifying selling costs = capital gain
The following 3 property classifications produce different Canadian results:
- Capital property: The taxable capital gain generally uses the applicable inclusion rate.
- Depreciable rental property: A capital gain can arise on appreciation, and prior CCA can create recapture taxed as income.
- Business inventory: A gain can be fully included as business income rather than treated as a capital gain.
Based on our client scenario at TFX: A non-resident sells non-depreciable Canadian capital property for CAD 900,000, with a CAD 600,000 adjusted cost base and CAD 40,000 of qualifying selling costs. The capital gain is CAD 260,000, and the 2025 taxable capital gain is CAD 130,000.
Without a certificate, the purchaser may hold CAD 225,000, which is 25% of the CAD 900,000 price. If the filed Canadian return produces CAD 52,000 of final tax, the seller’s estimated refund is CAD 173,000. The assumed CAD 52,000 illustrates reconciliation; the actual tax requires the seller’s full return.
Use the CRA’s capital gains guide, CCA guidance, and capital-gain calculation page. Related TFX guidance covers Canadian capital gains, foreign-property gains, and foreign rental property.
US tax when an American sells Canadian property
A US citizen generally reports the Canadian sale on the 2025 US return because US tax applies to worldwide gains. Personal or investment property usually uses Form 8949 and Schedule D. Rental property can require Form 4797, depreciation recapture, and a separate foreign tax credit calculation.
US citizen Canada investment property capital gains tax: why can the gains differ? The US computation converts the original purchase, each capital improvement, depreciation deductions, selling costs, and proceeds into US dollars at appropriate transaction-date rates. Currency movements can create a US gain that is larger or smaller than the Canadian gain.
A personal-use loss is not deductible on the US return. A rental sale can produce Section 1250 or other depreciation consequences even when Canada’s CCA claim was lower or the owner did not claim CCA.
Use the IRS pages for Form 8949, Schedule D instructions, and Form 4797. TFX explains foreign-property capital gains, capital gains for expats, and US filing from Canada.
Can the US home-sale exclusion apply to a Canadian home?
Yes. Based on Section 121 and Publication 523’s stated tests, a Canadian home can qualify because those rules do not add a US-location requirement. An owner meeting the 2-out-of-5-year tests can exclude up to USD 250,000, or USD 500,000 on a qualifying joint return.
The following 4 checks determine the basic eligibility path:
- The taxpayer owned the home for at least 2 years during the 5-year period ending on sale.
- The taxpayer used it as a main home for at least 2 years during that period.
- The taxpayer did not use another full exclusion within the restricted period.
- Joint filers meet the ownership, use, and filing-status conditions for the USD 500,000 limit.
Depreciation allowed or allowable for rental or business use after May 6, 1997, is not sheltered in the same way as qualifying home-sale gain. A mixed-use or former rental property needs a separate allocation and recapture review.
Based on our client scenario at TFX: A qualifying married couple sells a Toronto main home with a USD 400,000 US gain after currency conversion. The USD 500,000 exclusion can shelter the qualifying gain, but USD 30,000 of post-1997 depreciation from a rental period remains outside the exclusion rules.
Read IRS Publication 523, Topic No. 701, and the IRS sale-of-residence tax tips. TFX’s guides address foreign home sales, US tax on foreign property, and buying real estate abroad.
How the Canada–US tax treaty and foreign tax credit reduce double taxation
Article XIII permits Canada to tax gains from Canadian real property, while the saving clause preserves US taxation of most US citizens. Relief usually comes through Article XXIV and Form 1116 rather than excluding the sale from Form 1040. The credit remains limited to qualifying US tax.
A dollar of Canadian tax does not always produce a dollar of US credit. The 2 countries can use different currencies, gains, depreciation amounts, sourcing rules, tax years, and payment dates. Depreciation recapture may also fall into a different US character or credit calculation.
Review the official Canada–US income tax treaty and IRS Publication 597. TFX explains the US–Canada treaty, Form 1116, and Canadian capital-gains rules.
Does Canadian property need to be reported on FBAR or Form 8938?
No. Directly owned Canadian real estate is not reported on FBAR or Form 8938 merely because it is foreign. A Canadian bank account can trigger FBAR when aggregate foreign accounts exceed USD 10,000, while Form 8938 thresholds for single filers abroad start at USD 200,000 year-end.
For a single taxpayer living abroad, the Form 8938 threshold is more than USD 200,000 on the last day of the year or USD 300,000 at any time. Married joint filers abroad use USD 400,000 and USD 600,000. These thresholds apply to specified foreign financial assets, not a directly held property deed.
The following 5 entity or account forms can become relevant only when the ownership structure or assets trigger them:
- FinCEN Form 114: Canadian bank or financial accounts exceed the aggregate USD 10,000 FBAR threshold.
- Form 8938: Specified foreign financial assets exceed the filing-status and residence threshold.
- Form 5471: A US person has a reportable role or ownership in a Canadian corporation.
- Form 8865 or Form 8858: A Canadian partnership or foreign disregarded entity or branch meets the applicable reporting rules.
- Form 3520 or Form 3520-A: A foreign trust relationship or reportable transaction exists.
Check out the IRS FinCEN’s FBAR filing page. TFX’s US tax forms for expats, Canada filing guide, and citizenship-based tax guide provide the wider filing context.
Non-resident Canadian property tax checklist
A Canadian property file should cover 4 stages: before buying, while owning, before selling, and after selling. For a 2025 rental or disposition filed in 2026, preserve CAD source documents and USD conversion support. Start the Section 116 process at least 30 days before closing.
Before buying, the following 5 checks reduce eligibility and closing-tax surprises:
- Confirm federal purchase eligibility through January 1, 2027.
- Calculate provincial and municipal foreign-buyer taxes.
- Compare direct, corporate, partnership, and trust ownership reporting.
- Confirm financing, insurance, and non-resident closing requirements.
- Review US–Canada treaty and future sale implications.
While owning, retain the following 6 record groups:
- Purchase contract, statement of adjustments, and legal invoices.
- Land and building allocations.
- Capital-improvement invoices and permits.
- Municipal property-tax and vacancy-tax filings.
- Rental statements, NR4 slips, NR6 approvals, and Section 216 returns.
- Annual exchange-rate support and Canadian and US depreciation schedules.
Before selling, complete the following 5 actions:
- Obtain an ITN if needed.
- Engage a Canadian lawyer or notary and tax preparer.
- Prepare Form T2062 and, for depreciable taxable Canadian property, Form T2062A early; both forms may be required.
- Estimate the Canadian gain, US gain, CCA recapture, and US depreciation recapture.
- Plan for the certificate amount, closing holdback, and cash needed to complete the sale.
After selling, complete the following 4 filings or reconciliations:
- File the Canadian return and claim any excess Section 116 payment.
- Report the sale on Form 8949/Schedule D or Form 4797 as applicable.
- Reconcile Canadian tax on Form 1116 and track later tax changes.
- Retain the certificate, closing statement, returns, and exchange-rate records.
The CRA’s non-resident disposition process and IRS foreign tax credit compliance tips support this workflow.
TFX’s guides to foreign-property gains, foreign rental income, and US tax preparation in Canada explain the return details.
Frequently asked questions about Canada non-resident property tax
Yes. A US citizen can own existing Canadian property, but a new purchase of covered residential property can be prohibited until January 1, 2027 unless the person, property, or transaction qualifies for an exception. Federal purchase permission does not cancel Ontario, B.C., Toronto, municipal property, rental, or sale tax rules.
There is no single rate. Ordinary municipal tax depends on assessed value and local rates. For 2025, special charges include Ontario NRST at 25%, B.C.’s additional property transfer tax at 20%, Toronto MNRST at 10%, Toronto and Vancouver vacancy taxes at 3%, and B.C.’s provincial speculation and vacancy tax at 2% for foreign owners. For 2026, B.C.’s provincial vacancy-tax rate increases to 3%. The applicable combination depends on location, status, use, and transaction.
Without a Section 116 certificate, the purchaser’s common holdback is generally 25% of gross sale proceeds for relevant capital property, not 25% of the gain. A 50% rate can apply to specified property. The final Canadian return instead calculates tax from the gain, recapture, deductions, and other return facts.
Yes. A non-resident seller can file the required Canadian income-tax return and claim the Section 116 amount as tax paid. When the holdback exceeds final assessed tax, the CRA can issue a refund. The certificate process before closing can also reduce the initial holdback, but it does not replace the final return.
Both countries can tax the sale. Canada taxes gains from Canadian real property under Article XIII, and the US generally taxes a citizen’s worldwide gain. Form 1116 can reduce double taxation, but different gains, depreciation, sourcing, currency rates, and timing can prevent a full dollar-for-dollar credit. See TFX’s US–Canada treaty guide.
No. A directly owned Canadian house, condominium, or rental building is not a foreign financial account and does not go on FBAR. Canadian accounts receiving rent or sale proceeds can be reportable when aggregate foreign accounts exceed USD 10,000 at any time. Entity ownership can trigger separate forms.
Only for eligible years and facts. A Section 116 principal-residence claim can use Form T2091, but the calculation cannot count tax years during which the owner was not resident in Canada. The disposition must also be reported and designated as required. A non-resident should not assume the full gain is exempt.
Not for the 2025 or later calendar years. Legislation receiving royal assent on March 26, 2026 ended the federal UHT filing and payment requirement for those years. Unresolved 2022, 2023, and 2024 obligations remain. Local and provincial vacancy taxes can still apply even though federal UHT ended.
For broader filing support, review TFX’s US tax guide for Canada, US–Canada treaty guide, and foreign-property capital-gains guide.
No. Each municipality calculates ordinary property tax from local assessment and rate rules. For the 2025 taxation year, Toronto’s residential municipal rate was 0.601087% including the City Building Fund levy, or 0.754087% including the 0.153% education rate. For 2026, the total residential rate increases to 0.767311%.
Toronto’s Vacant Home Tax is 3% of current value assessment beginning with the 2024 tax year. Vancouver’s Empty Homes Tax is 3% for the 2025 assessed taxable value. B.C.’s provincial rate rises to 3% for foreign owners for 2026 use.
Passive ownership does not by itself create rental income or a sale gain, but municipal tax and declaration duties can still apply. Check the city every year because occupancy tests, filing dates, exemptions, and rates can change independently.
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