What Expenses Can You Claim On Rental Properties in Canada?

November 10, 2021 | Written by: Sohail Afzal

Rental Properties in Canada

It does not matter if you are a real estate owner or just starting with your first rental unit. If you get money in return for that rental space, your silent investor will need its share. 

Have you ever heard of this silent investor? 

We are talking about the CRA Canadian Revenue Agency who always gets its cut, and you need to pay the amount because they are always going to get it. 

But don’t worry! 

There is good news for you as there are many tax rebates and deductions that you can benefit from while paying your taxes at the end of the year. Most landlords are unaware, but today you will understand what expenses you can claim on rental properties in Canada. Because who doesn’t want a great tax return yearly? Right?

Who Is This Article For?

Before we get into the detail, this article is for beginner landlords who started renting a space of their property or unincorporated landlords who already have multiple properties to generate income through renting. This article is not for rental business owners as their rental corporation, and business tax filing process are entirely different. They are also entitled to different rebates and other incentives. 

Why Report Rental Income?

Reporting your rental income is necessary, even if you rent your basement illegally for a few hundred CAD a month. 

First of all, you never know when your tenant will report you to the CRA. Even worse, what if you get audited? So if you want to remain safe from any consequence, it is best to report your rental income to the CRA. As you know, late submission of tax is a great way to receive penalties. Remember that CRA is very good at their job, so you will be fined if they found out anything fishy– even five years ago. You will also have to pay interest on those penalties. So please pay what you owe them so that you can save yourself from the unnecessary burden of fines and claims. So now you understand why reporting rental income is essential.

Secondly, the expenses associated with your property are deductible, so whenever you spend on your rental property, keep in mind that you will get a return on the amount you paid. So, in this carrot versus stick scenario, doesn’t it make more sense to go with the carrot? (stick being the penalties, fines, interest or maybe even prison time) 

Basic Tax Deductions for Landlords

Now let’s come to the central part of our blog, which is the expenses you can claim on rental properties in Canada. 

Did you know that you can claim rental expenses which are deductible from your rental income? They are categorized as current expenses, which are often recurring, and the opposite of these expenses are capital expenses. Over a year, CRA will add them to your substantial amount, so you get an excellent return. 

Now let’s understand all the basic tax deductions one by one.

  • Advertising Fee: Expense that was related to promoting your rental.
  • Repairs and Maintenance: Any minor repair to the property.
  • Management Fees: If you’re paying a company to take care of your rental.
  • Utilities: If are you paying for hydro, gas, water or even the internet for the unit.

Final Words

Many rental property owners are unaware of this expense claim, don’t be that rental owner and have anyone in your family who owns a rental property. Now can be the best chance to educate them. Here is the link for the form T776 required to claim rental income (we almost forgot) until next time?

Contact us if you want to know more about income tax issues you think you might need assistance with.

Sohail Afzal CPA Toronto

Sohail Afzal, CPA, CMA, MBA

Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.

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