As a non-resident Canadian savvy about finances, you might consider if you owe taxes within Canada. Even though you are a Canadian, if your income comes from working within a foreign province, there’s a good chance that the foreign province’s tax laws apply. However, if you own and earn income from rental property in Canada, you’ve opened yourself up to some intricate tax considerations.
For all intents and purposes, income earned from property in Canada is as good as income earned while working in Canada. Yet, there are some procedures and options to save on taxes:
- Remit 25% of Gross Rent
The first approach for a rental income-supported non-resident Canadian is to essentially remit 25% of gross rental income. This entails the tenant withholding 25% of the total income, before deducting any expenses. At the end of the year, they provide you with documentation stating that 25% of taxation has been withheld. While straightforward, this method may lead to higher tax payments, as it does not account for deductible expenses.
- Remit 25% of the Net Rent
An alternate and often unknown approach involves remitting only 25% of the net rental income. Instead of the 25% of gross rent being withheld, this option involves 25% of the net rent being withheld. Various expenses like mortgage interest, property taxes, insurance, and other costs can be factored into the calculation. To put it simply, the final tax owed to Canada is mindful of any expenses incurred in maintaining and managing the property itself. Thus, this method provides a more accurate picture of your taxable income on property.
How a Professional Accountant Can Help?
By default, 25% remittance of gross rent is the process used, unless you change it. Unfortunately, not only is handling the default option a hassle, but changing and maintaining the alternate option is a complicated document-heavy process. In this case, it’s best to hire comptable impôt ACCOTAX, who are experts in Canadian Tax laws. Thus, you’re sure to receive accurate consultation, along with end-to-end assistance in saving tax on rental income. From accurate documentation to optimized strategies for long-term tax savings, the inputs of an accountant can be invaluable in securing your financial future.
Taxes are complex. As a non-resident Canadian, it’s best to be vigilant about your tax obligations. After-all, the road to financial freedom involves savings wherever possible! Hire a tax-accountant and experience better finances.
