Completing form T776, Statement of Real Estate Rentals

If you received income from renting real estate or other real property, you have to file a statement of income and expenses. On your statement of income and expenses, report the rental income you earned in the calendar year (from January 1 to December 31).

Form T776 will help you calculate your rental income and expenses for income tax purposes. Even though we accept other types of financial statements, we encourage you to use form T776.

To calculate your rental income or loss, complete the areas of the form that apply to you.

For more information on how to fill out form T776, go to guide T4036.

Part 1 – Identification

Write down your name and your social insurance number (SIN).

Fiscal period

In the "from" area, enter the year, month, and day your rental operation began, if this is the first year of operation. Otherwise, enter January 1 of the current year.

In the "to" area, you only need to enter the current tax year, since all rental properties have a December 31 year-end.

Was this the final year of your rental operation?

If this is the last year of your rental operation, please tick the Yes box.

Tax shelter identification number

If you have a tax shelter, enter the identification number in the correct box.

Partnership business number

If you are a partner in a partnership, enter your percentage of the partnership and provide the partnership business number. For more information on partnership, go to Income Tax Folio S4-F16-C1, What is a partnership?

Name and address of person or firm preparing this form

If someone else prepared form T776, Statement of Real Estate Rentals, enter the name and address of the person or firm that prepared it for you.

Business number or account number

Enter your 15-character RZ account number, if you have one.

Note

If you are a member of a partnership, enter your 15-character RZ business or account number.

Part 2 – Details of other co-owners and partners

Fill in this part if you are a co-owner or a partner in a partnership.

Part 3 – Income

List the address of your rental property and the number of units you rented.

You can receive rental income in the form of:

  • cash or cheques
  • kind (goods or commodities instead of cash)
  • services

On form T776, list the addresses of your rental property and the number of units you rented.

Report the rental income in the "Income" section of form T776 in the following order:

Line 8141 – Gross rents

If your tenant pays you in cash or by cheque, include the total rents you earned in the year on line 8141.

Line 8230 – Other income

If the tenant pays you in kind or with services, report its fair market value on line 8230.

Enter, on this line, the total income you received from other sources. Some examples of other income are:

  • Premiums and leases – You may receive an amount for one of the following:
    • granting or extending a lease or sublease
    • permitting a sublease
    • cancelling a lease or sublease
  • Sharecropping – You can earn income from renting farmland either in cash or as a share of the crop. Report any cash payments on line 8141. Report the fair market value of any crop share you earn on a sharecrop basis on line 8230.

Example

Glenn is a tenant in an apartment building. He owns a truck with a plough on it. His landlord, Sonya, asked him to plough the parking lot after every snowfall. Sonya does not pay Glenn cash for his work, but she reduces his monthly rent accordingly.

Sonya reports the rent she charges Glenn at line 8141 as "Gross rents," and the fair market value of Glenn’s services as "Other income," at line 8230. She then claims the fair market value of Glenn’s snowplowing services as an expense that relates to her rental operation.

Line 8299 – Gross rental income

Your gross rental income is your total "Gross rents" on form T776. Enter this amount at line 12599Footnote 1  of your income tax and benefit return.

If you are a co-owner of the rental property or a partner in a partnership that does not need to provide you with a Slip T5013, Statement of Partnership Income, enter the gross rental income for the entire property at line 12599Footnote 1  of your income tax return. Do not split the gross income according to your ownership share.

Part 4 – Expenses

Rental expenses

You can deduct any reasonable expenses you incur to earn rental income. For information on which rental expenses you can and cannot deduct, go to Rental expenses you can deduct.

Line 9949 – Total personal portion of expenses

If you rent part of the building where you live, you can claim the amount of your expenses that relate to the rented part of the building. You have to divide the expenses that relate to the whole property between your personal part and the rented part.

You can split the expenses using square metres or the number of rooms you are renting in the building, as long as the split is reasonable.

For example, if you rent 4 rooms of your 10-room house, you can deduct both:

  • 100% of the expenses that relate only to the rented rooms, such as repairs and maintenance of the rooms, plus
  • 40% (4 out of 10 rooms) of the expenses that relate to the whole building, such as taxes and insurance

If you rent rooms in your home to a lodger or roommate, you can claim all of the expenses for the part you are renting.

You can also claim an amount for the rooms in your home that you are not renting that both you and your lodger or roommate use. Factors such as availability for use or the number of persons sharing the room to calculate the allowable expenses. You can also calculate these amounts by estimating the percentage of time the lodger or roommate spends in these rooms (for example, the kitchen and living room).

Enter your expenses from the property in Part 4 of form T776, Statement of Real Estate Rentals. In the first column, "Total expense," enter the full amount of each expense. In the second column, "Personal portion," enter the part of each expense that was for personal use. Add up the amounts in each column and enter the result for "Total Expenses" on amount A, and enter the "Personal Portion" on line 9949. Then subtract the personal portion total from the total expenses to get your total deductible expense. Enter this result on amount 4.

If you are a co-owner or partner of a partnership, enter the personal portion of the expenses for all co-owners or partners on this line.

Note

You cannot claim the expenses for renting part of your property if you have no reasonable expectation of making a profit.

For more information on renting part of your personal residence, go to Changing part of your principal residence to a rental or business property.

Example

Rick rents out 3 rooms of his 12-room house. He is not sure how to split the expenses when he reports his rental income. Rick's expenses were property taxes, electricity, insurance, and the cost of advertising for tenants in the local newspaper.

Rick can claim the part of his expenses that relate to the area of the property he rented in the current tax year. Since Rick rented 25% of his residence (3 out of 12 rooms), he can deduct 25% of his property taxes, electricity, and insurance costs from his rental income. He can deduct the full amount of the advertising expense, since this expense relates only to the rented area.

When he completes form T776, Rick enters the full amount of each expense in the "Total expense" column. Then, in the "Personal portion" column, he shows the part of each expense that relates to his personal use. In this case, he enters 75% of the property taxes, electricity, and insurance costs for the property. He will not enter anything for advertising in the "Personal portion" column.

Rick can also claim capital cost allowance (CCA) on the rented area of the property if it does not create or increase a rental loss and he is not designating the building as his principal residence.

Line 9369 – Net income (loss) before adjustments

Enter on this line the gross income minus the deductible expenses (amount 6 minus amount 7) on form T776.

This amount is the net rental income of all co-owners or partners before claiming capital cost allowance, (CCA) for rental property.

If you are a co-owner, enter your share of the amount from line 9369 on amount 9 of form T776. This amount is based on your share of ownership of the rental property.

If you are a co-owner or partner, also fill in Part 2 – Details of other co-owners and partners, on form T776.

Line 9945 – Other expenses of the co-owner

Enter the amount of deductible expenses you have as a co-owner that you did not deduct elsewhere on form T776, Statement of Real Estate Rentals.

Line 9947 – Recaptured capital cost allowance

A recapture of capital cost allowance (CCA) can occur when the proceeds from the sale of depreciable rental property are more than the total of both:

If you have a recapture of CCA (the amount in column 6 – UCC after additions and dispositions of Area A is negative), enter it on this line.

If you are a co-owner, enter your share of the recapture.

Line 9948 – Terminal loss

If the amount in column 6 – UCC after additions and dispositions of Area A is positive and you no longer own any property in that class, you have a terminal loss. More precisely, you have a terminal loss when you have no more property in the class at the end of a year, but you still have an amount you have not deducted as capital cost allowance (CCA).

In the year you dispose of your rental property, you can subtract this terminal loss from your rental income and, if the loss is more than your rental income, you can create a rental loss.

Enter any terminal loss you had on the sale of rental property on this line.

If you are a co-owner, enter your share of the amount.

Line 9936 – Capital cost allowance

Enter the amount of your total capital cost allowance (CCA) calculated in Area A of form T776.

If you are a partner in a partnership, how you claim CCA will depend on whether your partnership is required to file a slip T5013SUM, Summary of Partnership Income, and issue you a slip T5013, Statement of Partnership Income. If the partnership issues you a slip T5013, your CCA amount is already included in box 110 of your slip T5013. If your partnership does not issue you a slip T5013, enter the total CCA allocated on the financial statements the partnership gave you.

Line 9974 – GST/HST rebate for partners received in the year

If you received a GST/HST rebate for partners, report the amount of the rebate that relates to the eligible expenses other than the CCA at line 9974.

Line 9943 – Other expenses of the partner

Enter the amount of deductible expenses you have as a partner in a partnership that you did not deduct elsewhere on form T776, Statement of Real Estate Rentals.

Line 9946 – Your net income (loss)

Enter your net income or loss on this line of your form. Enter it also on line 12600 Footnote 2 of your T1 return. If you have a loss, enter the amount in brackets.

Note

You may have to adjust the figure from line 9946 before entering it on your income tax return. You may have filed form T1139, Reconciliation of 2018 Business Income for Tax Purposes, with your 2018 income tax return. If so, you may have to fill in the same form for 2019. To find out if you have to file form T1139, and calculate the amount of income to report on your 2019 income tax return, see form T1139, Reconciliation of 2019 Business Income for Tax Purposes.

Area A – Calculation of capital cost (CCA) claim

To find out how to fill in Area A, go to How to complete the capital cost allowance (CCA) charts.

If you have acquired or disposed of buildings or equipment during your fiscal period, fill in the applicable Area B, Area C, Area D, Area E, or Area F, whichever applies, before completing Area A.

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