I'm moving from Canada to the US for work and plan to keep my…

Summary

You can cross double taxation off your worry list. The tax treaty and foreign tax credit rules are specifically written to protect you from paying taxes twice on the same money.

Because your rental property is in Canada, the Canada Revenue Agency (CRA) gets the first right to tax that income. You have two options for how Canada taxes this rent.

Pay tax on net incomeLower tax

You file Form NR6 so your property manager only withholds 25% of your net rental income after expenses. You then file a Section 216 Canadian tax return to report the exact income and expenses.

Pay tax on gross incomeSimpler but costly

Your tenant or property manager withholds 25% of your gross rent and sends it to the CRA. You do not have to file a Canadian rental tax return, but you cannot deduct any expenses. This usually means you pay more tax.

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Why Canada will not tax your US paycheck

When you move to the US and shift your primary ties, you become a part-year resident of Canada for tax purposes.

Under Section 114 of Canada's Income Tax Act, a part-year resident does not have to pay Canadian tax on foreign income earned after they become a non-resident. This means your US employment income is safe from Canadian taxes once you move.

Next steps

Follow these steps to set up your rental property, file your returns, and claim your tax credits in both countries.

Report the change of use on your Canadian exit return

When you convert your home to a rental, Canada treats this as a deemed sale. Report this change of use on your Canadian exit return to claim the Principal Residence Exemption. This resets the property's Canadian cost basis to its fair market value.

Elect Article XIII(7) on your first US tax return

Use the US-Canada Tax Treaty to step up the US cost basis of your rental property to its fair market value. This sets your basis for US depreciation.

File Form NR6 with the CRA

Before your first month of renting, file Form NR6 jointly with a Canadian resident agent, like a property manager. Once approved, they will withhold 25% of your net rental income instead of your gross income.

File a Section 216 return in Canada

File Canadian Form T1159, which is a Section 216 return, to report your actual rental income and expenses. This finalizes your Canadian tax bill for the rental.

Report the rental income on your US return

As a US tax resident, you must report your worldwide income. Report your Canadian rental income and expenses on US Form 1040 Schedule E. You can deduct expenses and depreciation.

Claim the Foreign Tax Credit in the US

File US Form 1116 to claim a foreign tax credit for the rental taxes you paid to Canada. This credit reduces your US tax bill so you do not pay tax twice on the same rental income.

Others who faced this

You are not the first to go through this. Here is how it went for others who asked the same thing.

Canada to USA move with large unrealized capital gains

u/Palebluedot14r/taxFeb 16, 2026

\[I used AI for writing below\] Hi everyone, I’m planning a move from Canada to the US (California) in 2026 on either an L-1A or TN visa (no green card). I’m single, no dependents. Currently, Canadian PR(citizenship applied). I’m trying to figure out how to best time the move from a tax perspective. My situation: • Unrealized capital gains in taxable accounts: \\\~1,000,000 CAD (mostly stocks) • RSUs from a US parent company that vest quarterly • RRSP \\\~60k CAD, TFSA \\\~20k CAD • I own a house in Alberta (considering selling before moving; could also rent it out) I understand that

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Legal sources

These facts come directly from the IRS, the Canada Revenue Agency, and cross-border tax practitioners.

TaxPage.com

Part-year Canadian residents do not pay Canadian tax on foreign income earned after they leave Canada.

TaxPage.com

Section 114 provides relief by allowing a part-year resident to exclude from taxable income all foreign income earned while a Canadian non-resident.

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