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Taxes for landlords: an overview

Last reviewed October 30, 2026

Rental property comes with tax obligations, and tax planning can make a meaningful difference to returns. This page is a plain-language orientation to the main concepts. It isn't tax advice. Every investor should work with an accountant who understands rental property.

Reporting rental income

If you own rental property personally, you report rental income and expenses on your income tax return, generally using CRA Form T776, Statement of Real Estate Rentals. Your net rental income (or loss) is added to your other income and taxed at your marginal rate. If you own the property jointly, income and expenses are generally split according to ownership.

Common deductible expenses

• Mortgage interest (not principal)
• Property taxes
• Insurance
• Utilities you pay
• Repairs and maintenance (current expenses)
• Property management fees
• Advertising, legal and accounting fees
• City licensing fees

If you rent out part of your own home, such as a basement unit, you can generally deduct only the portion of shared expenses that relates to the rental, for example based on square footage.

Current expenses vs capital expenses

This distinction matters. A current expense, like a repair that restores something to its original condition, is deducted in the year you pay it. A capital expense, like an improvement that provides a lasting benefit or makes the property better than it originally was, is added to the property's cost and claimed over time through capital cost allowance. Replacing a few shingles is a repair. A whole new roof may be capital. The CRA publishes guidance, and your accountant can help classify.

Capital cost allowance (CCA)

CCA is depreciation for tax purposes. You can claim a portion of the building's cost (not the land) each year. It's optional, and claiming it can reduce taxable rental income, but it generally can't be used to create or increase a rental loss. CCA claimed may be "recaptured" as income when you sell. Whether to claim it is a strategic decision, so discuss it with your accountant.

Selling a rental property

• Capital gains: the gain on a rental property is generally a capital gain, with a portion included in income. Check the CRA's current inclusion rate.
• Recapture: previously claimed CCA may be added back to income.
• Principal residence exemption: generally doesn't apply to a pure rental. If part of your home was rented, or you changed its use, special rules apply.
• Short holding periods: the federal "anti-flipping" rule generally treats profit on residential property held for less than 12 months as business income, with exceptions for certain life events.

HST and rental property

Long-term residential rents are generally exempt from GST/HST. However:

• Buying a new home to rent means paying HST on the purchase. The owner-occupied new housing rebates generally don't apply, but a new residential rental property rebate may be available.
• Short-term accommodation can be a taxable supply once you exceed the small supplier threshold.
• Substantially renovating a property can trigger self-supply rules in some cases.

Ownership structure

Investors sometimes ask whether to hold property personally, jointly, or in a corporation. Each has implications for tax, financing (many residential lenders prefer personal ownership), liability, land transfer tax, and eventual sale or estate planning. There's no universal answer. Get accounting and legal advice before you buy, because changing structures later can be costly.

Underused Housing Tax and other filings

Federal rules on certain residential property filings have changed over time. Ask your accountant whether any annual filings apply to you, especially if you hold property through a corporation, trust or partnership.

Record-keeping

• Keep every receipt and invoice, and separate rental from personal spending (a dedicated bank account helps).
• Keep your purchase documents and records of capital improvements. You'll need them to calculate gains when you sell.
• Track mileage if you travel to manage the property.
• Keep leases and rent records.