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Does departure tax apply to my Canadian rental property when I emigrate?

No. Emigrating from Canada triggers a deemed disposition of most property at fair market value, but Canadian real property is excluded. It is taxable Canadian property, so Canada retains the right to tax the real gain whenever you eventually dispose of it — nothing is triggered on the way out.

Who this applies to: Canadians emigrating who keep a Canadian rental property.

Key facts
Canadian real property
Excluded from deemed disposition
Non-registered portfolio
Included — this is the real bill
RRSP / RRIF / TFSA
Excluded
On eventual sale
Section 116 process applies

How it works

This surprises almost everyone, usually in the wrong direction — people brace for a tax bill on the condo and are blindsided instead by the deemed disposition on their non-registered investment portfolio, which is not excluded.

Registered plans such as RRSPs, RRIFs and TFSAs are also outside the deemed disposition.

From the date you become a non-resident, the rental income becomes subject to Part XIII withholding, which is a separate matter from the departure rules and starts immediately.

Where people get caught

Exclusion from departure tax is not exemption from tax. When you sell, the section 116 clearance-certificate process for dispositions of taxable Canadian property by non-residents applies, and a purchaser buying from a non-resident has their own withholding exposure. Plan the sale well before closing, not after.

Source: CRA Guide T4144; Information Circular IC72-17R6 (section 116 dispositions of taxable Canadian property).

Terms used here

Part XIII taxSection 216

Related questions

My tenant pays me rent directly. Do I still owe non-resident withholding tax?
Yes — and the legal obligation to withhold and remit sits with whoever pays you, which usually means your tenant.
Do I have to file a regular Canadian tax return as a non-resident landlord?
Usually not. If Canadian rent is your only Canadian income, the Part XIII withholding is your final obligation — the Section 216 is a separate, elective return.
How do I get the 25% non-resident withholding tax back?
File a Section 216 return. It taxes you on net rental income at graduated rates and the CRA refunds the difference.

Frequently asked questions

What happens to my TFSA when I leave Canada?
It is excluded from the deemed disposition, but it generally stops being useful once you are resident elsewhere, because most other countries do not recognise its tax-sheltered status. That is a separate question from departure tax and worth advice in your new country of residence.
Do I need to tell the CRA I have left?
Form NR73 is available for a residency determination but is not mandatory, and many advisers suggest filing it only when residency is genuinely unclear. Your departure date is reported on your final Canadian return.

This is general information, not tax or legal advice. Rules change and your situation is specific — verify with the CRA or IRS, or with a cross-border advisor, before acting. ← All answers

BorderBird helps cross-border landlords track rent and prepare CRA NR4 and IRS Schedule E filings — see how it works.