Tax Deductible Expenses from Rental Income

Posted by Tanya Chu

What expenses can you deduct if you have rental properties or receive rental income from one or two rooms in your home?

• mortgage interest (not principal)
• property taxes (even if it's just a fraction of your house)
• utility costs
• house insurance (can include tenant insurance, landlord insurance, and more)
• maintenance costs
• advertising
• property management fees
• rental losses (and if this exceeds overall income, and cannot be deducted on the current year, then it can be carried back or forward to reduce taxes for the other years)

Other more complicated expenses you can consider are:

• Capital cost allowance - claimed based on the purchase price of the building, furniture and fixtures, etc. (but the government usually reclaims this deduction back when you sell your home)
• Change in use (from residential to rental or vise versa) can result in a deemed dispositio

Check on CRA's - T4036 Rental Income - Includes Form T776

Link direct to the PDF
http://www.cra-arc.gc.ca/E/pub/tg/t4036/t4036-08e.pdf

Link direct to CRA's website
http://www.cra-arc.gc.ca/E/pub/tg/t4036/README.html

If you know other tax dedutible expenses one can claim on their rental income, please share your tips in the Comments section!