BorderBird
App →
United States / IRS

Do US state taxes apply to my rental as a non-resident?

In most states, yes — a non-resident state return is required on top of the federal one, with its own rules, thresholds and filing fees. Florida and Texas levy no personal income tax, so a rental in either is unusually clean and federal-only.

Who this applies to: Non-residents owning US rental property in any state.

Key facts
No personal income tax
Florida, Texas (among others)
Typical requirement
Non-resident state return
Also possible
Local filings; occupancy taxes on STRs

How it works

The amount of state tax is often modest. The compliance burden is not: it is an additional annual return, in an additional system, with its own deadlines.

This is the cost people forget to price in when comparing a cheaper property in a high-tax state against a more expensive one in Florida.

Some states also impose separate local or municipal filings, and short-term rentals frequently carry occupancy or tourist taxes that have nothing to do with income tax.

Where people get caught

Canada does not care which US state you chose. Your Canadian return needs the foreign tax credit to reflect the total US tax paid, federal plus state, and the two systems keep different years and different rules about what is creditable. Keep the state return in the same file as the federal one from year one.

Source: State revenue department requirements vary; confirm for your specific state.

Terms used here

Schedule E

Related questions

I'm Canadian and buying a US rental. What am I missing on tax?
By default the IRS takes 30% of gross rents with no deductions. The §871(d) election moves you to a net basis.
Should I hold my US rental property in an LLC as a Canadian?
Usually not. The US disregards a single-member LLC; the CRA treats it as a corporation. The mismatch can produce double taxation.
What happens to my money when I sell my US rental as a non-resident?
FIRPTA. The buyer withholds 15% of the gross sale price — not the gain — unless you get a withholding certificate first.

Frequently asked questions

Which states are simplest for a Canadian buying a rental?
States with no personal income tax — Florida and Texas being the most common choices for Canadian buyers — mean federal filing only, which removes an entire annual return. That is a compliance advantage rather than a reason on its own to buy there.
Do I get a credit in Canada for US state tax?
Foreign tax credit rules are intended to relieve double taxation on US tax paid, but the interaction between federal and state tax and the Canadian credit is technical and fact-specific. Have your Canadian return prepared by someone who has seen the state 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.