Should I Keep My Canadian Rental After Moving?

Real property is one of the assets Canada never lets go of: rents and gains from Canadian real estate remain taxable in Canada no matter where the owner lives, and the Canada–U.S. treaty preserves that right. The United States, taxing its residents on worldwide income, taxes the same rent and the same gain — with a foreign tax credit as the bridge between the two.

The result is not double taxation, but it is double administration, and the owner who understands the machinery before leaving keeps far more of the rent than the owner who discovers it afterward.

Canada's default for non-resident landlords is blunt — Part XIII tax of 25% of gross rents, withheld and remitted monthly by the tenant or an agent. The civilized alternative is the section 216 regime: file Form NR6 before the year (with a Canadian agent undertaking the withholding duties) so that withholding applies to projected net income, then file the section 216 return to true up actual results. On a leveraged property, the difference between tax on gross and tax on net is usually the entire profit margin.

On the U.S. side, the rental joins your Form 1040 on Schedule E — and U.S. rules require depreciation whether or not you claim it, on U.S. schedules, in U.S. dollars, with currency conversion of every figure. Canadian tax paid becomes a foreign tax credit, generally eliminating true duplication, though timing mismatches and state taxes can leave residue. The eventual sale runs the full gauntlet: section 116 clearance in Canada, recapture and gain in both countries, and credits to reconcile them. Keep the property if it earns its complexity; sell before departure if it was marginal to begin with.