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How to report rental income, capital gains, and investment interest from abroad

Learn how to properly report rental income from foreign properties, gains from overseas assets, and interest from global investments

If you earn income from property, securities, or savings held outside Canada, it’s essential to know how to report it accurately. The Canada Revenue Agency (CRA) taxes worldwide income if you are a Canadian tax resident, and that includes rental income, investment gains, and interest earned abroad.

This matters because each income type is treated differently for tax purposes. If reported incorrectly, you could face reassessments or penalties. Whether you own a vacation rental in another country, hold foreign stocks, or receive interest from an offshore bank, this guide will help you report it correctly and stay compliant.

Foreign Rental Income

If you own rental property outside Canada, you are required to report all related income and expenses in Canadian dollars. The rules mirror domestic rental reporting, but with a few important international considerations.

Reporting Requirements:

  • Form T776 (Statement of Real Estate Rentals) must be completed to calculate your gross rental income, eligible expenses, and net rental income. Use one form per property or combine similar ones by country.

  • Convert all income and expenses to Canadian dollars using either the transaction date rate or the average annual exchange rate.

  • Deduct eligible expenses such as:

    • Property management fees paid to local agents

    • Mortgage interest, but not principal repayments

    • Utilities, property taxes, and insurance premiums

    • Maintenance and repairs directly related to rental operations

    • Reasonable travel costs for inspections or supervision visits

  • Report the net income or loss on line 12600 of your personal return.

If foreign tax was withheld on the rental income, you may apply for a foreign tax credit using Form T2209 to reduce Canadian tax on that income.

Tip: Keep a running spreadsheet that records all foreign rental, interest, and capital transactions throughout the year. Include the transaction date, amount in foreign currency, the exchange rate used, and the Canadian dollar equivalent. This will save hours of work at tax time and help ensure accuracy if your return is reviewed.

Capital Gains on Foreign Assets

Selling a foreign property, shares, or other capital assets may trigger a taxable gain in Canada. Capital gains from foreign assets are subject to the same 50 percent inclusion rate as domestic assets.

What to Do:

  • Calculate your adjusted cost base (ACB) in Canadian dollars. Include purchase costs, legal fees, and capital improvements.

  • Convert sale proceeds to Canadian dollars using the exchange rate on the date of sale.

  • Deduct any allowable selling expenses such as brokerage fees, commissions, and legal costs.

  • Report the net gain on Schedule 3 and transfer 50 percent to line 12700 of your tax return.

If you paid tax on the gain in the foreign country, keep documentation and claim a foreign tax credit on Form T2209. If your foreign property holdings exceeded $100,000 CAD in cost during the year, you are also required to file Form T1135.

Foreign Investment Interest

Interest from bank deposits, foreign bonds, or other fixed-income sources must be reported annually, in Canadian dollars, even if no T5 slip was issued.

What to Report:

  • Include total interest received, converted into Canadian dollars, on line 12100 of your return.

  • Use the appropriate exchange rate to convert each interest amount or the total for the year.

  • Report the gross amount, even if tax was withheld in the foreign country.

  • Keep all supporting documents such as account statements and tax receipts.

Interest is fully taxable and not eligible for preferential tax rates, unlike dividends or capital gains.

Important: The CRA expects complete transparency when it comes to foreign income. Reporting errors or omissions—especially with foreign property, large transactions, or unreported interest—can lead to penalties, even if the mistake was unintentional. Always report foreign income in full and retain your documents for at least six years.

Reporting Foreign Rental, Capital, and Interest Income

Income Type Where to Report Key Forms CRA Notes
Foreign rental income Line 12600; Form T776 T776, T2209 (if tax withheld) Must convert all income and expenses to CAD
Capital gains (foreign assets) Line 12700; Schedule 3 Schedule 3, T2209, T1135 if over $100k Convert purchase and sale amounts to CAD; only 50% of gain is taxable
Foreign investment interest Line 12100 Manual entry; T2209 if applicable Fully taxable; report gross income in CAD, even without a T5 slip