Rental Property Tax Deductions: Everything You Can Claim in Canada

Owning a rental property is a proven strategy for generating passive income and building long-term wealth. The CRA allows landlords to deduct a wide range of expenses incurred to earn rental income, reported on Form T776.

1. Mortgage interest (not principal)

Often the largest deduction. The interest portion of mortgage payments is deductible; the principal is not. Fees related to obtaining the mortgage (broker fees, appraisal fees) are also deductible but generally must be amortized over the life of the loan.

2. Property taxes and insurance

Municipal property taxes assessed on the rental property are fully deductible. Insurance premiums — liability, fire, landlord — are deductible in the year they provide coverage.

3. Repairs and maintenance

Costs to repair or maintain the property in its current condition are fully deductible as current expenses — fixing a leaky pipe, painting between tenants, repairing a broken appliance. Improvements that extend the property's life or upgrade it beyond original condition are capital expenses, depreciated through CCA.

4. Property management and professional fees

Property management fees, accounting fees to prepare the T776, and legal fees for drafting a lease or evicting a tenant are deductible.

5. Utilities

If the lease stipulates the landlord pays utilities — gas, electricity, water, cable, internet — these are fully deductible.

6. Advertising and marketing

Costs to advertise the property for rent — listings, newspaper ads, "For Rent" signs — are deductible.

7. Motor vehicle expenses

Deductible to collect rent, supervise repairs, and manage the property. CRA rules are strict: if you own only one rental property, you can generally only deduct vehicle expenses if the property is in the general area where you live and you personally do the repairs. A detailed mileage log is essential.