How Do Co-Owners of Canadian Property Split Their Rental Tax Obligations?
Owning Canadian property with a partner, spouse, or group can be a great investment, but if you’re all non-residents, the tax side gets complicated fast.
The Canada Revenue Agency (CRA) doesn’t view co-owners as one entity. Each individual is taxed on their share of the rental income — and each is responsible for filing separately, even if the property is jointly owned.
Let’s break down how non-resident co-owners can properly split rental income, expenses, and taxes to stay fully compliant and avoid costly errors.
Each Co-Owner Reports Their Share
If two or more people own a rental property, the CRA expects each person to report their proportionate share of income and expenses based on ownership percentage.
For example:
You and your partner own a condo in Toronto 50/50.
The property earns $30,000 in rent and has $10,000 in expenses.
Each of you must report $15,000 income and $5,000 expenses in your respective Section 216 returns.
This rule applies whether you’re spouses, friends, or business partners — the CRA looks strictly at ownership percentage, not who manages or collects rent.
Separate Tax Filings Are Required
Even if you share a property, you cannot file a joint Section 216 return. Each non-resident owner must:
File their own NR6 form (if electing reduced withholding)
Have taxes withheld on their share of rent (25% of their portion)
File their own Section 216 tax return to claim expenses and calculate net income
If one co-owner forgets to file, the CRA can still pursue them individually for their unpaid share of tax, interest, and penalties.
Shared Expenses Must Be Split Fairly
Expenses like property tax, insurance, and mortgage interest should be divided in the same ratio as ownership. However, individual costs, like travel for maintenance or personal accounting fees, can only be claimed by the person who incurred them.
The CRA may request receipts or bank records to confirm how the expenses were split, especially if the ownership ratio doesn’t match how income is reported.
What About Partnerships or Corporations?
If your co-ownership operates more like a business partnership — for example, you both actively manage multiple rentals — you may need to file a partnership information return (T5013).
Alternatively, if you own through a corporation, the business must file a corporate return under Part I tax, not Section 216. Each setup changes how the CRA calculates and attributes income.
Co-Ownership Doesn’t Mean Shared Liability
Here’s a critical point: Even though you share the property, you are individually responsible for your own tax reporting. One owner’s non-compliance doesn’t shield the other from CRA action.
Each owner should file their own NR6 and Section 216 return every year to stay in good standing.
