Owning Canadian property as a non-resident has become increasingly complex and expensive. Between the foreign buyer ban (extended to 2027), provincial speculation taxes of 20-25% in BC and Ontario, the 1% annual Underused Housing Tax, and municipal vacancy taxes like Vancouver’s 5%, the layers of taxation can be staggering. Rental income faces a default 25% withholding on gross rent — but a Section 216 election lets you deduct expenses and pay tax on net income instead, often saving thousands. If you sell, you must obtain a clearance certificate (Form T2062) or the buyer is required to withhold 25% of the gross sale price.
Foreign Buyer Ban (2023-2027)
Current Rules
Prohibition
Details
Start date
January 1, 2023
End date
January 1, 2027
Who’s banned
Non-Canadians
What property
Residential
Who Is Affected
Affected
Foreign nationals
Non-citizens, non-PR
Foreign corporations
Any ownership
Foreign-controlled Canadian corps
Exemptions
Allowed
Permanent residents
Not banned
Work permit holders
Some exemptions
Refugee claimants
Exempt
International students
Limited exemptions
Commercial property
Not covered
Recreational/cottage
Not primary target
Penalties
Violation
Consequence
Illegal purchase
Fine up to $10,000
Property
May be ordered sold
Professionals
Also face penalties
Provincial Foreign Buyer Taxes
BC Foreign Buyer Tax
Tax
20%
Where
Specified areas (Metro Vancouver, etc.)
Who
Foreign nationals, foreign corps
On
Purchase price
Exemptions
Some work permit, PR situations
Ontario Non-Resident Speculation Tax
Tax
25%
Where
Anywhere in Ontario
Who
Foreign nationals, foreign corps
On
Purchase price
Exemptions
Some refund opportunities
Other Provinces
Province
Foreign Buyer Tax
BC
20% (specified areas)
Ontario
25%
Other provinces
Generally none
Underused Housing Tax (UHT)
What It Is
UHT
Annual tax
1% of property value
Who must file
Non-residents (all), some Canadians
Deadline
April 30 each year
For
Previous calendar year
Who Must File
Always File
Non-citizen/PR owners
Even if exempt from tax
Trustee owners
Partner owners
Corporate owners
Non-qualifying
Who Owes the Tax
Taxable
Exempt from Tax
Vacant property
Primary residence
Underused property
Rented 180+ days
Qualifying occupancy
Filing Even if Exempt
Requirement
Must file
Every year
Claim exemption
On the return
Failure to file
$5,000+ penalty
Property Value
Calculation
Based on
Greater of assessed value or recent sale
1% of
Property value
Example
Scenario
Non-resident owns condo
Value
$500,000
Vacant 2024
No qualified occupant
UHT owing
$5,000
Rental Income Tax
Withholding Tax (Part XIII)
Default Rule
Tax rate
25%
On
Gross rent
Withheld by
Tenant or agent
Remitted to
CRA
Example Without Election
Situation
Monthly rent
$2,500
Gross annual
$30,000
25% withholding
$7,500
Your expenses
Not considered
Section 216 Election
Better Option
File Canadian return
Elect under s.216
Report
Net rental income
Deduct
Expenses
Tax on
Net income
Example With Section 216
Situation
Gross rent
$30,000
Expenses
$18,000
Net income
$12,000
Tax (~25% bracket)
$3,000
Savings
$4,500
NR6 Form
Process
File NR6
Before year/before renting
CRA approves
Reduced withholding
Withhold
25% of net (not gross)
File s.216 return
After year end
Selling Canadian Property
Non-Resident Selling
Process
1. Notify CRA
Before or within 10 days
2. Get clearance certificate
Required
3. Otherwise
Buyer withholds 25%+
Certificate of Compliance
Form T2062
File
Before closing preferred
Purpose
Calculate tax owing
If approved
Buyer doesn’t withhold
Timeline
6-8 weeks
Without Certificate
Buyer Must
Withhold
25% of gross sale price
Remit to CRA
Within 30 days
You
File return to recover overpayment
Capital Gains Tax
Standard Rules
Gain calculation
Sale price - ACB
Inclusion rate
50% (or 66.67% over $250K)
Tax rate
25% flat or file return
Section 116 Compliance
Non-Resident Seller
Must notify CRA
Proposed disposition
Pay or post
Security for tax
Get certificate
Or buyer withholds
Municipal Taxes
Vacant Home Taxes
City
Tax
Vancouver
5% of assessed value
Toronto
1% of assessed value
Ottawa
1% of assessed value
Growing
More cities adding
Speculation and Vacancy Tax (BC)
Tax
Rate
0.5-2% of assessed value
Non-resident
2%
Where
Specified BC areas
Annual
Filing required
The Bottom Line
Non-resident property ownership in Canada carries significant tax obligations that require proactive management. File the UHT return every year by April 30 (even if exempt) to avoid the minimum $5,000 penalty. For rental income, always elect Section 216 and file an NR6 to reduce withholding to 25% of net instead of gross. When selling, apply for your clearance certificate early — processing takes 6-8 weeks and the buyer is legally required to withhold 25% without one. Consider working with a Canadian tax professional who specializes in non-resident taxation.