For Canadian residents who own California real estate
Canadians With Property in California: US and California Tax Filings
A California property brings two sets of US filings for a Canadian owner: the federal ones every state shares, and California's own. California taxes nonresidents on income from California sources and has its own withholding when you sell.
Quick answer
Does a Canadian who rents out a California property file in California?
Generally yes. The California Franchise Tax Board says nonresidents must file if they receive income from a California source and meet the income and federal filing conditions (FTB). Federally, the rent goes on Form 1040-NR if you make the real property election, and a sale brings FIRPTA withholding plus California real estate withholding unless an exemption applies.
At a glance
- Federal return
- Form 1040-NR with the real property election
- California return
- Required for nonresidents with California-source income above the thresholds
- Sale
- FIRPTA withholding, plus California real estate withholding unless exempt (Form 593)
- Exempt from California withholding
- Sales of US$100,000 or less, foreclosures, and others listed on Form 593
California's rules for a nonresident owner
Filing. The FTB requires a return from residents, part-year residents and nonresidents who are required to file a federal return, receive income from a California source and have income above a certain amount (FTB: Do you need to file?). Rent from California property is California-source income.
Selling. California has its own real estate withholding on sales of California real property, filed on Form 593 after every transaction. It does not apply when the property is US$100,000 or less, in foreclosure, or in the other cases listed on Form 593; you claim an exemption by giving Form 593 to the escrow agent before closing (FTB: Real estate withholding). The FTB page does not give the rate; your escrow agent applies it.
The federal side for a Canadian owner in California
Rent from a California property is US-source income. By default, 30% is withheld from the gross rent. Most Canadian owners instead make the real property election (Code section 871(d)), which treats the rental as effectively connected income: you file Form 1040-NR, deduct expenses such as mortgage interest, property tax and depreciation, and pay tax on the net (IRS Pub 519).
When you sell, the buyer withholds under FIRPTA (Code section 1445): generally 15% of the amount realized, 10% if the buyer will live in the home and the price is US$1,000,000 or less, and nothing at US$300,000 or less in that case (IRS Pub 515). The withholding is a prepayment; the 1040-NR for the year of sale settles the actual tax. See selling US property as a Canadian and FIRPTA.
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 California 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, the California nonresident return, and the year-of-sale filings that recover FIRPTA and California withholding. Written quote first. See also Canadians with Florida rentals.
Common questions
Do Canadians pay California tax on a California rental?
California requires nonresidents with California-source income above its thresholds to file, so a rental usually means a California nonresident return as well as the federal 1040-NR.
Is there California withholding when a Canadian sells?
Yes, unless an exemption applies, such as a sale of US$100,000 or less. It is reported on Form 593, and it is on top of federal FIRPTA withholding.
What is the federal FIRPTA rate on a California sale?
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.
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.
- California FTB: Do you need to file?
- California FTB: Real estate withholding
- 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: Selling US property, FIRPTA, Florida rentals.
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