Rental expenses you can deduct
For more information on what we consider a current or capital expense, go to Current expenses or capital expenses.
Some expenses you incur are not deductible. For more information, go to Expenses you cannot deduct.
If you are modifying a building to accommodate persons with disabilities, buying an older building, or encounter other situations, go to Capital expenses - Special situations.
The following is a list of expenses that are deductible:
- Professional fees (includes legal and accounting fees)
- Repairs and maintenance
- Management and administration fees
- Motor vehicle expenses
- Office expenses
- Other expenses
- Prepaid expenses
- Property taxes
- Salaries, wages, and benefits (including employer's contributions)
You can usually deduct amounts for advertising that your rental property is available for rent.
You can deduct the premiums for insurance coverage on your rental property for the current year. If your policy gives coverage for more than one year, you can deduct only the premiums that relate to the current year.
Deduct the remaining premiums in the year or years to which they relate.
Professional fees (includes legal and accounting fees)
You can deduct fees for legal services to prepare leases or collect overdue rents.
If you incur legal fees to buy your rental property, you cannot deduct them from your gross rental income. Instead, allocate the fees between land and building and add them to their respective cost.
You buy a property worth $200,000 ($50,000 for the land and $150,000 for the building) and incur legal fees of $10,000.
Split the $10,000 proportionately between the land and building. In this case, $2,500 is added to the cost of the land (for a total of $52,500) and $7,500 is added to the cost of the building (for a total of $157,500).
You can also deduct expenses you had for bookkeeping services, audits of your records, and preparing financial statements. You may be able to deduct fees and expenses for advice and help to prepare your income tax and benefit return and any related information returns. You can deduct these fees if you needed the help because of your rental operation.
Repairs and maintenance
If you pay for repairs to your property to earn rental income, you can deduct the cost of labour and materials. You cannot deduct the value of your own labour.
Management and administration fees
You can deduct the amounts paid to a person or a company to manage your property.
You can also deduct amounts paid or payable to agents for collecting rents or finding new tenants.
If you have commissions when selling your rental property, include them as outlays and expenses on Schedule 3, Capital Gains (or Losses), when you report the disposition of your property.
You can deduct the cost of office expenses. These include small items such as pens, pencils, paper clips, stationery, and stamps.
Prepaid expenses are expenses you pay for ahead of time. Claim any expense you prepay in the year or years in which you get the related benefit.
Maria paid $2,100 for insurance on her rental property. The insurance was for the current tax year and the two following years. Although she paid the insurance for three years, she can deduct only the part that applies to the current tax year from her gross rental income. Therefore, Maria can deduct $700 in the current tax year and $700 in each of the following two years.
You can deduct property taxes that relate to your rental property for the period when it was available for rent. For more information, go to Vacant land and Costs relating to construction, renovation, or alteration.
Salaries, wages, and benefits (including employer's contributions)
You can deduct amounts paid or payable to superintendents, maintenance personnel, and others you employ to take care of your rental property. You cannot deduct the value of your own services.
As an employer, you can deduct your portion of the following contributions:
- Canada Pension Plan (CPP)
- Quebec Pension Plan (QPP)
- Employment Insurance premiums
- Workers' Compensation
You can also deduct any insurance premiums you pay for an employee for a sickness, an accident, a disability, or an income insurance plan.
For more information on wages, go to Guide T4001, Employers' Guide - Payroll Deductions and Remittances.
You might travel to collect rents, supervise repairs, and manage your properties. To claim the expenses you incur, you need to meet the same requirements discussed in Motor vehicle expenses.
Travelling expenses include the cost of getting to your rental property. Travelling expenses do not include board and lodging, which we consider to be personal expenses.
You can deduct expenses for utilities, such as gas, oil, electricity, water, and cable, if your rental arrangement specifies that you pay for the utilities of your rental space or units.
Forms and publications
- Guide T4036, Rental Income
- Form T776, Statement of Real Estate Rentals
- T4001, Employers' Guide - Payroll Deductions and Remittances
- Interpretation Bulletin IT-417, Prepaid Expenses and Deferred Charges
- Form T2125, Statement of Business or Professional Activities
- Guide T4002, Business and Professional Income
- Schedule 3, Capital Gains (or Losses)
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