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October 30th, 2018

How to manage an Ontario property as a non-resident

Property owners that live outside of Canada will likely seek out a property management company to be there for the property and its tenants when the owner physically cannot.

Hiring a property manager is one of the few ways you can manage a property in a country that is not your own, or, as a non-resident.

Asking tenants to send money internationally or wait for you to fly in to fix something is one sure way to become a slum lord, fast. Property management teams are there to act as a friendly point of contact between you, your tenants, your real estate asset and the government.

Defining a non-resident

Anyone that “normally, customarily or routinely” lives in another country is classified as a non-resident by the Canadian Revenue Agency (CRA) and will be subject to the tax rules in place for those with non-residency status.

Non-residency status can be given to people that have no significant residential connections to people in Canada, those that live outside the country throughout the tax year, or those who stay in Canada for less than 183 days of the tax year.

Being a non-resident with Canadian property

If you are designated with non-resident status, there are some things you need to know if you own any rental properties in Canada, especially when it comes to taxes.

Non-resident property owners are subjected to a 25% withholding tax on gross monthly rent, which must be sent to CRA on your behalf.

There are specific tax forms non-resident landlords need in order to report their property income, most importantly the NR6 forms, NR4 forms, summary documents and Section 216 returns.

Again, this becomes less complicated with a property management team.

Record keeping

Record keeping is another big part of tax eporting and rental property ownership. As with any landlord regardless of location, keeping records of all transactions related to a rental property is essential for factual reporting come tax season.

Original documents displaying property costs, renovation costs, furnishing upgrades and other improvements help both the government and potential buyers understand any gains or losses on the value of your property.

Professional assistance

Hiring a property management team is one of the simplest ways to remove the administrative burden associated with property ownership.

Further, non-resident property owners can benefit even more from the help of a property manager who compiles the records, reports, and rents for the landlord, along with filling vacant units, communicating with tenants and overseeing the property for maintenance.