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If you purchase property that you rent out, you have to file an NR6 form before the first month's rent is received. This form allows you or your agent to remit taxes on your net estimated rental income vs. remitting 25% of your gross rental income. The NR6 form is a joint election between yourself as the owner and your agent stating that you will file a Section 216 Canadian tax return by June 30th of the following year and pay any taxes due by April 30th the same year. The following demonstrates this further:
REAL ESTATE EXPENSES
No NR6 election With an NR6 Election
Gross rental income $12,000 $12,000
Monthly expenses $15,000 $15,000
Monthly tax payment due $ 250 $ Nil
Tax refund due $ 3,000 $ Nil
As you can see, this is a cash flow issue more than anything so it is very important to file this form. My fee for preparing this form is $200 per year and I will need details of your anticipated expenses in order to complete it - see detailed list below - plus the name, address and phone number of your Canadian agent.
If you have no agent, you must remit 25% of your rental income to the government by the 15th of the month following the month in which the rent was received. In other words, January you collect $1,000 in rent, then by February 15, you have to pay $250 to CRA.
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