What Are the Top Mistakes Non-Resident Landlords Make With CRA Rental Filings?
If you’re a non-resident earning rental income from property in Canada, you’re already navigating one of the most complex areas of the Canada Revenue Agency (CRA) tax system. Unfortunately, many landlords unknowingly make errors that cost them time, money, and peace of mind.
These mistakes are almost always avoidable — but they can lead to penalties, overpayment, or even audits if you’re not careful.
Here are the top filing mistakes non-resident landlords make — and how to fix them before the CRA does.
1. Not Filing Under Section 216
This is the most common and most expensive mistake.
If you don’t elect under Section 216, the CRA automatically withholds 25% of your gross rent — with no deductions allowed.
Filing under Section 216 lets you pay tax on net income (after expenses), meaning you can claim property tax, insurance, repairs, mortgage interest, and more.
Failing to make this election means you could lose thousands every year in unnecessary tax.
2. Missing the NR6 Filing Deadline
Even landlords who know about Section 216 often file their NR6 form too late. This form must be approved by the CRA before you start collecting rent if you want your property manager to withhold tax on estimated net income instead of gross rent.
If you file late, the CRA still demands the full 25% withholding, and you’ll have to wait months for a refund.
3. Forgetting to File the Section 216 Return
Filing the NR6 form reduces withholding, but it doesn’t finalize your taxes. You must still file your Section 216 return by June 30 of the following year to confirm your actual income and expenses.
If you don’t file, the CRA can revoke your NR6 approval and demand payment of the full withheld tax amount — even if you earned less.
4. Combining Personal and Rental Expenses
Some landlords make the mistake of claiming personal costs — like travel for vacation or household furniture — as rental deductions. The CRA disallows these quickly, and repeated violations can trigger audits or penalties.
Always keep clear records that separate personal use from rental business activity.
5. Not Keeping Receipts or Records
The CRA requires proper documentation for every deduction. If you can’t prove an expense, it doesn’t exist in their eyes.
Maintain receipts for all property-related costs, including digital copies. This is especially critical if you file from outside Canada.
6. Assuming Property Managers Handle Everything
Property managers handle rent and tax withholding, but you are still responsible for filing your own NR6 and Section 216 returns.
If they make a mistake, the CRA holds you accountable, not them.
7. Ignoring CRA Mail or Deadlines
The CRA often sends important notices by mail, not email. Non-residents who ignore or delay responses risk missing deadlines or losing refund eligibility. Always keep your address updated with the CRA and respond promptly.
