With limited ability to travel this summer, many Canadians are looking to rent or purchase vacation properties closer to home.  At the same time, non-residents who own Canadian property may also be faced with travel restrictions and offering their cottages for rent or for sale. Before you rent or buy a vacation property from a non-resident, there are a few important tax implications that you should know.

Renting from a non-resident: Will you need to pay their withholding tax?

Non-residents who rent out Canadian property are required to pay Canadian tax on that income.  The payer, such as the tenant or agent, is required to withhold 25% of the gross rental income paid and remit that amount on behalf of the non-resident by the 15^th day of the month following the month in which the rental income is paid.  Most non-residents hire an agent or property manager to collect the rent, remit the withholding tax to the CRA and file the appropriate NR4 information return