Non-resident Rental Property Claim
According to the tax law, non-residents are required to pay 25% of the total rental income as a withholding tax to CRA. However, non-residents can submit additional tax forms to reduce the tax amount.
The Benefits of applying NR6:
By submitting an NR6 form to CRA, the property owner is only required to pay 25% of the monthly net rental income. This reduces the tax on rental income and increase the cash flow of your rental.
Steps for applying NR6:
1. After purchasing the property, hire a Canadian accountant or agent to manage your rental property
2. Have your accountant submit your NR6 form based on the estimated income and expenses of the rental in current year. (You can do it by yourself)
*NR6 filing deadline is December 31st of the year before the rental of the property, however it is better to obtain the NR6 approval form before receiving your first rent income.
3. As mentioned above, you need to have a property withholding tax agent and they must be a Canadian resident
4. The agent is required to deduct 25% of the net rental income per month based on NR6
5. Be prepared to submit the form by March 31 for the following year
6. Prepare and submit a non-resident income tax return in accordance with Section 216 of the Canadian Income Tax Act
7. Once your income tax return is assessed and you have received a non-resident tax assessment from CRA, please review it carefully as CRA may make some changes after auditing.
**Repeat step 2 to 7 each year until the property is sold or become a tax resident in Canada
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