Tax over US-owned homes in Canada: The entire story
Canada has been a prime hub for real estate and so multiple country citizens, especially from the USA, have been actively investing in properties in Canada. For the same reason, the rate of non-resident property ownership in Canada for 2019 was approximately 14.6%.
According to the current property prices in Canada, the Canadian government exclaimed their worry towards these inflated prices on the current and future generations for the home population who are looking into settling down now. Due to the same reason, the government decided to take necessary steps to curb or limit this price inflation of property to ensure the empty properties owned by non-residents in Canada does not affect the Canadian residents.
As per the newly released Budget 2021 by the Canadian government in April this year, any non-resident of Canada who has an unused real estate property is liable to an annual tax of 1% on the overall value of their real estate property owned in Canada, starting from January 1, 2022.
Key Pointers For Non-Resident Rental Home Owners In Canada
NR4 Form Statement
This is only applicable to those non-Canadian property owners who have active rental income from their homes in Canada. In such a situation, the non-resident has to submit copies of the NR4 form which is the direct statement of the amount of payment that is being paid to them against the property in question. This form statement highlights their gross rental earning.
NR6 Form
This form is also beneficial for the US homeowners in Canada who earn income from the property they own. It is a part of the income tax act and can help non-Canadian property owners in Canada to claim a tax return which reduces the tax burden of a flat 25% rate if a tax treaty is made on the overall tax payments of the gross value earned from the rental property.
Double Taxation
If a citizen of the United States of America has an income source from the property owned in Canada, he or she might be liable to double taxation. This is only if the income is being taxed both in the United States of America and Canada, for a US citizen. For more clarity on the same, you can seek advice from the International Tax Consultancy Service in Toronto or a Canadian Tax Consulting service.
Overall, being a US resident and owning a house in Canada is no longer an easy investment option. Before you decide to invest in properties overseas in Canada, you should consult tax consultants in Toronto or other parts of Canada to know the best options of reducing the tax payable or increasing your tax credit options like foreign tax credit. The Tax and Accounting Company offers a personal tax consultancy service in Toronto to those non-residents who are stuck in the country due to covid-19 so reach out for advice today.
