Reporting real estate income and expenses

Your tax obligations when you rent out real estate

When you rent out property, you must report the income on your tax return, and you can also deduct related expenses. To determine income and expense amounts, there are a number of details to consider.

Reporting income

Income earned from renting out property can be considered rental income or business income depending on the duration and the types of services included in the rental agreement.

To learn more about rental income see the rental income guide. If you determine that your rental operation is a business, go to Sole proprietorships and partnerships.

Which expenses to deduct and when to deduct them

Keep track of all your expenses related to your rental property as these may be deductible. You can claim some expenses entirely for the year you made them in. Other expenses can be amortized, or spread out, over several years.

Expenses you can claim in full for the same year are:

• current or operating expenses which are short-term expenses associated with maintaining a property.

Expenses you need to claim over several years are:

• capital expenses which generally provide a longer-lasting benefit or improve the value of a property.

For a detailed explanation of expenses, go to Current expenses or capital expenses?

Other considerations when earning rental income

In addition to claiming your income and deducting allowable expenses, there are other considerations that could impact your tax situation.

Related links

• Rental income guide
• Rental income: line 126 – Net line 160 – Gross
• Statement of real estate rentals
• Rental income vs. business income