Copyright © 2024 Wealth Illustrated
If you own real estat that you rent, rental income need to be declared on your tax return. However, you can also deduct expenses in order to maximize your net income. In order to prepare a tax return for rental income, you need to file a form from the Canada Revenue Agency called Statement of Real Estate Rentals (form T776).
Here is how to report rental income and tax deductions:
1) Calculate your gross income for the year:
Rental income is calculated based on the total revenues generated during the calendary year, between January 1st and Deceber 31st. For example, if you rented an appartment that generated $1,250/month for 12 months, your gross income for the year would be $15,000
In the T776 form, the gross income should be reported in the “Gross nets” column.
2) Calculate deductible expenses you incurred during the year:
You can deduct eligible expenses from your gross rental income.
Common expenses that are deductible:
- Mortgage interests
- Municipal taxes
- School taxes
- Home insurance
- Utilities
- Costs related to maintenance and repairs (e.g. painting, snow removal, lawn mowing)
Other expenses that can be deducted include for advertising costs.
Expenses that cannot be claimed
- Property transfer duties (also called “welcome tax” in Quebec)
3) Determine your net income
Deducting your expenses from you gross income will result in your net rental income.
If your net income is negative, it means you had a loss that you can report.
Disclaimer:
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting/tax professionals. Wealth Illustrated will not be held liable for any problems that arise from the usage of the information provided on this page.
