Renting out your Florida condo as a Canadian

Left alone, the US takes thirty percent of your gross rent. Not your profit — your rent, before the association fee, before the mortgage interest, before the insurance. Most Canadian owners discover this in year one, from a property manager who has already withheld it. There is an election that changes the whole basis of the tax, it is available to you, and it comes with a commitment that nobody explains until afterward.

Published September 6, 2026

This page is about the tax basis, because that is the part that is quietly expensive and the part almost nobody is told before they sign a lease. Everything on it is US federal law and applies to a Canadian owner identically whether they live in Toronto, Calgary, Vancouver or Montréal, and whether the condo is in Miami or Naples.

1. What the default actually costs

The IRS position is plain: income from US real property owned by a nonresident alien, where it is not connected with a US trade or business, is taxed at 30% or a lower treaty rate. The word doing the damage is gross. The tax is computed before anything comes off.

Take a unit letting for $4,000 a month. The gross is $48,000 a year, and the default tax is computed on all of it — while the association fee, the insurance, the property tax, the management commission and the mortgage interest are all still to be paid out of the same $48,000. It is entirely possible to owe US tax on a property that lost money over the year, and Canadian owners do.

Worse, the withholding usually happens at source. A property manager acting as withholding agent is obliged to hold it back, so the first time many owners see the number, it is already gone.

2. What the section 871(d) election changes

A nonresident alien who holds US real property for the production of income may elect to treat all income from that property as effectively connected with a US trade or business. That single change moves you from a flat rate on gross receipts to graduated rates on net income, and it makes deductions attributable to the real property income available.

In the $48,000 example, the association fee, property tax, insurance, repairs, management and mortgage interest come off before the rate applies. For a leveraged unit with a real fee, the difference between the two settings is not a refinement. It routinely decides whether letting the unit makes sense at all.

3. How the election is made, and the commitment inside it

The election is made by attaching a statement to your return — Form 1040-NR, or an amended return — and the statement has to carry the detail: every property or interest in property you hold in the US, the extent of your ownership, where it is, what has been substantially improved and when, the dates you have owned it, the income it produced, and any previous election or revocation.

Now the part that gets left out of most explanations of this. The election stays in effect for all later tax years unless you revoke it. It is not an annual choice you re-make when it happens to suit. Revoking it means filing an amended return within three years of the date the original return was filed, or two years from the date the tax was paid, whichever is later. Outside that window, revocation requires the IRS to approve it.

4. The consequence that arrives years later

Depreciation is the item that surprises Canadian owners at resale rather than at filing. A US rental property is depreciated, and that depreciation reduces your basis in the property — which raises the taxable gain when you eventually sell, on a mechanism that operates whether or not the deduction was actually claimed along the way.

The practical consequence is that letting decisions and sale decisions are one conversation, not two, and that a Canadian owner who intends to sell within a few years should model both ends before letting the unit at all. The sale side has its own withholding regime.

• Selling a Florida condo as a Canadian — FIRPTA, the thresholds, and the certificate that reduces the withholding before closing
• Everything here for Canadian owners, in English and in French
• La même question en français — 30 % du brut, ou l’élection 871(d)

5. Before the tax question there is a document question

None of the above matters if the building will not let you do it. Every Florida condominium sets its own minimum lease term in its recorded declaration, and many cap how many times a unit may be let in a year. Across the buildings covered on this site the minimum runs from one month to twelve. A twelve-month building is not a negotiation, and an owner who bought planning on seasonal letting can find the declaration says otherwise.

City rules sit on top of that and the stricter governs. Miami Beach treats anything under six months and one day as a short-term rental, prohibits it outright in several zoning districts, and requires the specific building to appear on the City's authorized list.

• The association is the other landlord — approval, screening, and what a board can refuse
• Which buildings allow short stays, and how the question gets answered
• Every building covered here — 46 towers built from the Miami-Dade county record rather than developer copy, and explicit about which figures are contested
• Property tax on the same unit — the 10% cap, the reset the January after you buy, and the school levy it does not cover
• Before you sign a management agreement — which license covers which obligation, and the eight questions that settle the rest
• Rental yield calculator — gross and net, with the fee and the vacancy in it

What this page does not cover

It does not tell you whether to make the election. That turns on your deductions, your other US income, your holding structure and your Canadian position, and it is an accountant's answer rather than an agent's. It does not cover the Canadian side of the same rent — the income is reportable at home and the interaction with foreign tax credits belongs on its own page with the CRA cited.

It also does not cover holding a US property through a corporation or a trust. That is a materially different tax picture, it is decided before purchase rather than after, and getting it wrong is expensive in both directions.