Guide · Tax

Rental property expenses you can deduct in Canada (T776)

You can deduct reasonable current expenses you paid to earn rental income, line by line on Form T776, while capital costs like the building are written off slowly through capital cost allowance (CCA).

General information, not tax advice. It follows CRA's 2025 Rental Income Guide (T4036) as published on canada.ca. Rules change and your facts matter. Check the official sources below or talk to a tax professional before you file.

Key points

Report rental income and expenses on Form T776, Statement of Real Estate Rentals.
Current expenses (repairs, insurance, interest, property tax) are deducted in the year you pay or incur them.
Capital expenses (the building, major upgrades, appliances) are not deducted at once. You claim CCA over time.
Mortgage principal, land, land transfer tax and your own labour are never deductible as expenses.
CCA cannot create or increase a rental loss.
Keep records for at least six years from the end of the tax year.

T776 expense lines at a glance

Expense lines in Part 4 of Form T776, summarized from CRA's T4036 guide.

Line	Expense	What counts (and what doesn't)
8521	Advertising	Ads for your rental, including Canadian newspapers, TV and radio, and finder's fees.
8690	Insurance	Premiums for the current year only. A multi-year policy is spread over the years it covers.
8710	Interest and bank charges	Interest on money borrowed to buy or improve the rental. Not principal. Loan fees such as mortgage application or appraisal fees are generally deducted over five years (20% a year). Money borrowed for personal use doesn't qualify.
8810	Office expenses	Small items like pens, paper and stamps. Desks, chairs and filing cabinets are capital items (CCA).
8860	Professional fees	Legal fees for leases or collecting rent, bookkeeping, accounting and tax preparation. Legal fees to buy the property are added to its cost, not deducted.
8871	Management and administration	Fees paid to a property manager, or to an agent who collects rent or finds tenants.
8960	Repairs and maintenance	Labour and materials for minor repairs. Not the value of your own labour. Capital repairs go to CCA.
9060	Salaries, wages and benefits	Pay for a superintendent or maintenance staff, plus your employer share of CPP/QPP, EI and similar. You cannot pay yourself.
9180	Property taxes	Municipal property tax for the period the property was available for rent.
9200	Travel	Travel to collect rent, supervise repairs and manage the property. Board and lodging are personal. Limits apply (see motor vehicle).
9220	Utilities	Heat, hydro and water you pay under the rental arrangement.
9281	Motor vehicle (not including CCA)	One rental property: only if it is in your general area, you do some repairs yourself, and you use the vehicle to carry tools and materials. Driving to collect rent is personal. Two or more properties: you can also claim trips to collect rent, supervise repairs and manage them, if they are at separate sites away from your home.
9270	Other expenses	Condo fees (your share for upkeep and repair of common property), landscaping (in the year paid), lease cancellation payments (spread over the remaining lease), and the rental share of telephone costs.

Two other lines matter. Line 9936 is your CCA claim. Line 9949 is the personal portion of expenses, used when you rent part of your home.

Current vs capital expenses: CRA's tests

A current expense is deducted in full this year. A capital expense is added to the property's cost and written off through CCA. CRA asks:

Lasting benefit?

A capital expense usually gives a lasting benefit. A current expense tends to come back after a short time, like painting.

Maintain or improve?

Restoring something to its original condition is usually current. Making it better than it was is usually capital.

Part or separate asset?

Repairing part of the building (rewiring) is usually current. Replacing a separate asset (a fridge) is capital.

Value?

Compare the cost to the value of the property. CRA uses this only when the other tests don't give a clear answer.

Two more rules to remember:

Repairs to get a newly bought, used property ready to rent are generally capital.
Repairs made to get a property ready to sell are generally capital, too.

Common mistake: deducting a full kitchen renovation or new appliances on line 8960. Those are usually capital. Replacing cupboard doors with similar ones, or fixing a leaking pipe, is usually current.

Mortgage principal is not deductible

Your monthly mortgage payment mixes interest and principal. Only the interest goes on line 8710. Get the annual mortgage statement from your lender and use the interest figure. Land transfer tax is not deductible either. CRA says to add it to the cost of the property.

Renting part of your home

If you rent a basement suite or rooms in the home you live in, you can deduct:

Expenses that relate only to the rented area, in full (for example, painting the suite).
The rental share of whole-house expenses, like property tax, insurance, utilities and mortgage interest.

Split shared costs on a reasonable basis, such as floor area or number of rooms. CRA's example: renting 4 of 10 rooms lets you claim 40% of whole-house costs. If there's no reasonable expectation of profit, you can't deduct them.

CCA on the rented area is possible, but it can't create or increase a loss, and CRA's guide ties it to not designating that part as your principal residence. Read T4036 or ask a professional first.

Co-owners

Owning a property with someone else does not by itself make you a partnership.
On T776, co-owners enter the gross rent for the whole property. Do not split the gross rent by ownership share.
Expenses are entered for the whole property too. Then you claim your share of the net income or loss, based on your ownership share.
List the other co-owners and their shares in Part 2 of the form.

Capital cost allowance (CCA) basics

CCA is the tax version of depreciation. You claim a percentage of the building's cost each year.

Class 1 at 4%. Most rental buildings, and parts like wiring, plumbing and heating, are Class 1 at 4% a year on a declining balance.
Land is not depreciable. Split the purchase price between land and building. Only the building goes into the CCA class. Split legal fees and land transfer tax the same way.
Half-year rule. Normally, in the year you buy, you can claim CCA on only half of the net addition.
CCA cannot create or increase a rental loss. It can only bring net rental income down to zero.
CCA is optional. You can claim any amount from zero up to the maximum.
Separate classes. Each rental building with a capital cost of $50,000 or more (building portion only) goes into its own separate class.
Recapture. If you sell for more than the class's remaining balance, CCA claimed (up to original cost) is added back to income.
Terminal loss. If nothing is left in the class and a balance remains, you may deduct a terminal loss.

Accelerated Investment Incentive: current status

The Accelerated Investment Incentive (AII) sets aside the half-year rule and boosts the first-year claim. It covers eligible property acquired after November 20, 2018 and before 2025, available for use before 2028. For property normally under the half-year rule, like Class 1, CRA's AII page gives 3 times the normal first-year claim if available for use before 2024, and 2 times from 2024 to 2027.

CRA's 2025 T4036 guide describes, as a proposed change, the Reaccelerated Investment Incentive (RII): property acquired on or after January 1, 2025 and available for use before 2034, phased out after 2029. The Department of Finance says Bill C-15, the Budget 2025 Implementation Act, No. 1, received Royal Assent on March 26, 2026. For a 2025 or 2026 purchase, confirm the exact first-year factor on CRA's pages before you claim.

Records to keep

Rent received, by tenant and month.
Receipts for every expense: who was paid, when and for what.
Annual mortgage interest statements.
Purchase documents: statement of adjustments, legal bill, land transfer tax, land and building split.
A CCA schedule for each property, year by year.
A vehicle logbook if you claim line 9281.

CRA says to keep records for six years from the end of the tax year they relate to.

FAQ

Can I deduct my mortgage payments on my rental property?

Only the interest part. Mortgage principal repayments are not deductible. Claim the interest on line 8710 of Form T776.

Is a new roof a repair or a capital expense?

It depends on CRA's tests. Restoring the roof to its original condition with similar materials usually points to a current expense. Upgrading to a better, longer-lasting roof, or work done to get a newly bought property ready to rent, usually points to a capital expense that you claim through CCA.

Can I deduct condo fees on a rental condo?

Yes. CRA's T4036 guide lists condominium fees under other expenses (line 9270) for the share that covers upkeep and repair of the common property.

Can CCA create a rental loss?

No. You cannot use capital cost allowance to create or increase a rental loss. CCA can only bring your net rental income down to zero. CCA is optional, so you can also claim less than the maximum or none at all.

How long do I need to keep rental receipts?

Generally six years from the end of the tax year they relate to. Keep purchase documents and CCA records for as long as you own the property, plus six years after the year you sell it, because they are needed to calculate recapture and capital gains.

Related tools and guides

Official sources

Last checked: 2026-11-01.