For Canadian snowbirds and owners of Arizona rentals
Canadians With Property in Arizona: Arizona 140NR and US Filings
Arizona is a winter home for many Canadians. If the home is rented out or sold, Arizona counts that income as Arizona-source and expects a nonresident return once your income passes its threshold, on top of the federal filings.
Quick answer
Does a Canadian with an Arizona rental file an Arizona return?
If your income passes the threshold. The Arizona Department of Revenue's 2025 Form 140NR instructions say nonresidents report income from Arizona sources, including rental income and the sale of Arizona real estate, and must file if gross income is more than US$15,750 (single), US$31,500 (married filing jointly) or US$23,625 (head of household), with the threshold multiplied by your Arizona income ratio (AZ DOR).
At a glance
- Arizona return
- Form 140NR for nonresidents
- 2025 thresholds
- US$15,750 single; US$31,500 joint; US$23,625 head of household, prorated by the Arizona income ratio
- Arizona-source income
- Includes rental income and the sale of Arizona real estate
- 2025 rate
- 2.5% of Arizona taxable income
Arizona's rules for a nonresident owner
| Point | What Arizona says (2025 Form 140NR instructions) |
|---|---|
| Who files | Nonresidents report income derived from Arizona sources on Form 140NR |
| Arizona-source income | Includes wages, rental income, business income and the sale of Arizona real estate |
| Filing threshold | Gross income over US$15,750 (single or married filing separately), US$31,500 (married filing jointly) or US$23,625 (head of household), multiplied by the share of federal adjusted gross income that is Arizona income |
| Tax | 2.5% of Arizona taxable income for 2025 |
Source: Arizona Department of Revenue, 2025 Form 140NR instructions.
IRS rules that apply in every state
| Topic | Rule | Source |
|---|---|---|
| Rent | 30% withheld from gross rent unless you elect under Code section 871(d) to treat it as effectively connected; with the election you file Form 1040-NR on the net | Pub 519 |
| Sale | FIRPTA withholding under Code section 1445: generally 15% of the amount realized; 10% if the buyer will live in it and the price is US$1,000,000 or less; none at US$300,000 or less in that case | Pub 515 |
| Days in the US | Snowbirds who pass the substantial presence test can file Form 8840 to claim a closer connection to Canada | Pub 519 |
More: selling US property, FIRPTA, snowbird days and Form 8840.
Treaty and law references
- Canada-US income tax treaty, general effective date (IRS Table 3): treaty January 1, 1985; 3rd protocol January 1, 1996; 4th protocol December 16, 1997; 5th protocol January 1, 2009 (IRS Table 3; IRS treaty documents).
- Article IV (Residence): the tie-breaker for someone resident in both countries, starting with where you have a permanent home.
- Article VI (Income from Real Property): rent from Arizona property may be taxed in the US.
- Article XIII (Gains): the US may tax the gain on selling US real property.
- Article XXIV (Elimination of Double Taxation): how Canada and the US relieve double tax on the same income.
- US law: Code section 871(d) real property election (Pub 519); Code section 1445 FIRPTA withholding (Pub 515); Form 8840 closer connection (Pub 519).
- Canadian tax on the same property is a matter for Canadian rules and your Canadian accountant.
How we help
Gurleen Kaur, CPA licensed in British Columbia and Washington State, prepares the federal 1040-NR with the real property election, Form 8840 for snowbirds, and the year-of-sale return that settles FIRPTA, and coordinates the Arizona 140NR. Written quote first. See also snowbird days and Form 8840.
Common questions
What is the Arizona income tax rate for 2025?
2.5% of Arizona taxable income, per the 2025 Form 140NR instructions.
Is rental income from an Arizona home Arizona-source income?
Yes. The Arizona Department of Revenue lists rental income and the sale of Arizona real estate as income from Arizona sources.
When must a Canadian nonresident file in Arizona?
When gross income passes the 2025 threshold (US$15,750 single, US$31,500 joint, US$23,625 head of household) after multiplying it by the Arizona income ratio.
Sources
Every rule and figure on this page links to the IRS, CRA or other official source it comes from. Amounts change; we re-check them before each engagement.
- Arizona Department of Revenue: 2025 Form 140NR instructions
- IRS: Publication 519
- IRS: Publication 515
- IRS: Canada tax treaty documents
- IRS: Tax treaty tables (Table 3, list of treaties)
Gurleen Kaur, CPA licensed in British Columbia and Washington State. Last updated November 11, 2026. This page is general information, not tax or legal advice for your situation.
Related guides: Snowbird days, Selling US property, FIRPTA.
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