In Canada, where everything is taxable, regardless of buying or selling, there are taxes when there is a transaction.
No matter whether you are a citizen or not, or where you are, as long as you invest in a Canadian territory, from purchase to profit, every step of the process needs to file and pay taxes as required by the rules, and ultimately comply with tax laws and your Depending on your individual circumstances, the tax bureau will decide whether to refund you or require you to pay back the tax. Take real estate investment as an example. No matter how you finally decide to dispose of your real estate investment, in order to treat all investors more fairly and to prevent non-tax residents from being held accountable for tax evasion, tax law stipulates that any non-tax resident must register an individual with the Canada Revenue Agency (CRA) Before renting or selling the investment property, mortgage 25% of the total income from rent or house price to the tax bureau, and after the transaction is completed, submit the calculation of expenses and net income to apply for a tax refund.
Investment house for rent:
Method 1.
For income generated from the rental of investment properties, tax law S216 stipulates that any non-tax resident must mortgage 25% of the expected annual rental income before the property is rented
Method 2.
But 25% of a year’s total income is not a small number after all. For most investors who have just paid a deposit and still have a mortgage, it is difficult to prepay such a large sum of money in advance. The tax bureau then allows non-tax residents to apply for NR6 through an agent that meets the requirements. NR6 needs to be submitted on or before January 1 each year. Once approved, the client can budget the net income of one year’s rent and mortgage the net income 25% of the amount is in your personal CRA account, thus saving considerable cash flow compared to method 1. There will be a discrepancy between the budgeted net income and the actual expenses, so in the second year, you still need to follow the steps in method one, submit the NR4 slip tax return before March 31
Method 2 is favored by more investors because it can save cash flow. However, it should be noted that in order to facilitate accountability, the tax law stipulates that the principal shall bear all possible tax liabilities. Due to the heavy responsibility and complicated tasks, reliable clients are hard to buy. Regarding the specific tax details of non-tax residents’ rental income, we also have special articles for your reference.
