Rent from a building is usually taxed first by the country where the building stands, and your home country may tax it too. As of October 2026, Canada's CRA says the payer of a non-resident landlord's rent withholds 25% of the gross rent unless an approved election lets it be taken on the net. The US taxes a nonresident alien's US rent at 30%, or on the net if the owner elects.
Canadian rental property owned by a non-resident
The CRA explains that whoever pays the rent, such as a tenant or property manager, must withhold 25% of the gross rent and report it on an NR4 slip. A non-resident owner can ask the CRA to approve a lower withholding on net rent by filing Form NR6, on or before January 1 of the year or before the first rent payment. If the NR6 is approved, the owner files a section 216 return, Form T1159, by June 30 of the following year. The CRA page gives June 30, 2026 for 2025. Without an approved NR6 the return can be filed within two years of year end. Our non-resident guide covers the mechanics.
US rental property owned by a nonresident alien
The IRS says that income from US real property that is not effectively connected with a US business is taxed at 30%, or a lower treaty rate. A nonresident alien can instead choose, under Internal Revenue Code section 871(d), to treat all such income as effectively connected. That allows deductions and the regular graduated rates. The choice is made with a statement attached to Form 1040-NR, and it stays in place until revoked. The IRS also tells the owner to give Form W-8ECI to the person who pays the rent in the first election year.
US residents who own rental property in Canada
A US citizen or resident is taxed on worldwide income, so the Canadian rent goes on Schedule E (Form 1040), Part I. The IRS tells you to enter the city, province or state, and country of a foreign property on line 1a. Residential rental property outside the US is depreciated over 30 years under the alternative depreciation system, according to Publication 946, not the 27.5 years used for a US rental. Tax paid to Canada can usually be claimed as a credit on Form 1116, as Publication 514 explains. Small amounts may qualify for exceptions.
Which forms matter
| Situation | Forms to know |
|---|---|
| Canadian rent, non-resident owner | NR4 from the payer, Form NR6, Form T1159 |
| Canadian rental, reported in Canada | Form T776, Statement of Real Estate Rentals |
| US rent, nonresident alien | Form 1040-NR, election statement, Form W-8ECI |
| Foreign rental, US taxpayer | Schedule E, Form 1116, Form 4562 for depreciation |
Example
This example uses invented numbers. Marcus lives in Illinois and rents out a flat in Toronto for CAD 2,000 a month, so gross rent is CAD 24,000 in the year. If the tenant withholds 25% of gross, CAD 6,000 goes to the CRA even though his costs could take a large share of that rent. With an approved NR6, the withholding is based on net rent. On his US return he reports the rent and costs on Schedule E and may claim the Canadian tax as a foreign tax credit.
Common mistakes
- Waiting for the CRA to ask. The NR6 timing is before the first rent payment or by January 1.
- Skipping the US election as a Canadian owner of US property, and paying 30% on rent that had real costs.
- Depreciating a foreign property over 27.5 years instead of 30.
- Forgetting that the foreign tax credit has its own form.
What to do next
Write down where each property stands, who pays you, and which country you live in. Then check the deadlines above. We are a US CPA firm and do not prepare Canadian or Indian returns, but we handle the US side and coordinate with your adviser abroad.
Frequently asked questions
Does Canada withhold tax on rent paid to a non-resident?
The CRA says the payer withholds 25% of gross rent. Form NR6 lets the owner ask to have the withholding calculated on net rent instead.
What is the US rate on a nonresident's US rental income?
The IRS gives 30%, or a lower treaty rate, on income that is not effectively connected. The section 871(d) election treats it as effectively connected so deductions apply.
Can I claim Canadian tax paid on my US return?
Generally yes, through the foreign tax credit on Form 1116, subject to its limits. Publication 514 explains the rules.
How long do I depreciate a rental building abroad?
Publication 946 says property used mainly outside the US uses the alternative system, and its residential table gives 30 years for property placed in service after 2017.
What about rental income in India?
India has its own rules and forms, and this page does not cover them. Start with our guide to what India taxes for NRIs and ask us before you file.
This page is general information, not tax advice. Check each source for the year you file.
Official sources
- IRS: Publication 527, Residential Rental Property
- IRS: Publication 946, How To Depreciate Property
- IRS: Instructions for Schedule E (Form 1040)
- IRS: Publication 514, Foreign Tax Credit for Individuals
- IRS: Nonresident aliens, real property located in the US
- CRA: Form T776, Statement of Real Estate Rentals
- CRA: Filing and reporting requirements for rental income of non-residents
This page summarizes public guidance in plain language. If anything here differs from the official source, the official source controls.
General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.