Do I have to pay property tax after leaving Canada?

After leaving Canada, many homeowners wonder if they are exempt from paying taxes on their property. The answer is that non-resident status does not automatically cancel any local tax, fee, or income tax obligations. This article covers all the key aspects—from municipal taxes to federal filings—that apply to Canadian property owners after they leave the country.

1. Municipal property tax

All property owners in Canada are required to pay municipal property tax annually, regardless of whether they live in the area or abroad. The tax is calculated based on the assessed value of your house or apartment, which is determined each year by the municipal assessor.

  • Payment terms and methods vary by province and municipality, but most often the tax is divided into two or four equal installments per year.

  • The owner can set up automatic payments through online banking or give power of attorney to a legal entity to pay on their behalf.

  • If the payment is overdue, the municipality charges a late penalty and interest on the amount owed, which increases monthly.

2. Property income tax (rental tax)

If you rent out your property after leaving Canada, your income is taxable as non-resident income. Key points:

  1. Non-Resident Withholding Tax. Without submitting additional documents, the tenant or agent is required to withhold 25% of the gross rent and transfer it to the CRA.

  2. Form NR6. Completing and approving CRA Form NR6 allows you to reduce the withholding rate to the estimated net profit.

  3. Annual T776 return. Even if taxes are withheld, the non-resident owner is required to file a T776, taking into account mortgage, insurance, repair, and property management expenses. Any excess tax withheld will be refunded, and any underpayment will be assessed.

3. Capital gains tax on sale

When you sell real estate after leaving, the difference between the purchase price and the sale price is taxable as capital gains:

  • Residency principle: if you became a non-resident before the date of sale, the gain is taxed as a non-resident at a rate of 50% (half inclusion rate).

  • Exemption for principal residence: if the property sold was your principal residence before you left, you may be eligible for an exemption even if you are a non-resident, provided you file Form T2091(IND) with the CRA by the deadline.

  • Reporting the sale. After the sale, report it on your tax return for the year in which the transaction took place. If you do not notify the CRA of the sale within 30 days, you may be subject to penalties.

4. Other federal and provincial fees

4.1 GST/HST on new homes

If you purchased a new home from a builder and then sell it as a non-resident, GST (5%) or HST (provincial combined tax) may be payable on the difference. However, when you resell, your payment is generally not subject to GST/HST again—it was already paid when you made the original purchase.

4.2 Non-Resident Speculation Tax (NRST) and other regional fees

Some provinces have additional fees for the purchase of real estate by non-residents (e.g., NRST in Ontario — 15%), but these fees apply to the purchase itself, not to subsequent ownership or sale.

5. Organizing payments and representation

To avoid late payments and penalties, non-resident owners should:

  1. Set up automatic payments for municipal taxes and utility bills through online banking.

  2. Grant power of attorney to a lawyer or financial agent in Canada to sign bills, file returns, and pay fees on your behalf.

  3. Work with a tax advisor who monitors the deadlines for filing NR6, T776, and T2091(IND) forms and keeps track of changes in tax legislation regarding non-residents.

6. Consequences of non-payment and advice

  • Penalties and interest on municipal fees can reach several percent per month of the overdue amount.

  • Penalties for late filing of NR6 returns or notices of sale of a residence can reach hundreds of dollars.

  • Loss of exemption for Principal Residence Exemption is possible if form T2091(IND) is not filed on time.

To minimize risks, non-resident owners should plan the financial and tax support for their real estate in advance, using professional lawyers, accountants, and real estate consultants.

Conclusion

Regardless of your location, all obligations of a property owner in Canada remain in effect. Municipal taxes, rental income taxes, and potential capital gains tax on sale must be paid on time. Setting up automated payments, obtaining a power of attorney, and working with tax professionals will help you avoid penalties and ensure proper compliance with all Canadian tax and civil law requirements.