Every legitimate expense deductible against rental income — organized by category
Rental income is taxable in Canada — but so many legitimate expenses are deductible that your actual tax burden can be quite low if you are organized. Here is every deduction the CRA allows, with practical guidance on claiming them.
Mortgage interest (not the principal portion — only the interest component). Property taxes. Building insurance premiums. Repairs and maintenance that restore but don't improve the property. Property management fees. Advertising costs (rental listings, photography). Legal fees for lease preparation or tenant disputes. Accounting fees related to the rental. Travel to inspect or maintain the property (CRA mileage rate). Utilities you pay on behalf of tenants. Office expenses for managing the rental property. All expenses require receipts — use a dedicated folder by tax year.
CCA is a depreciation deduction on the building structure (not the land). For most residential rental properties (Class 1), the rate is 4% declining balance annually. CCA reduces your taxable rental income while you own the property — but it triggers recapture when you sell, meaning you are taxed on the amount you previously deducted. Generally advisable for higher-income landlords who benefit most from the current deduction. Important constraint: you cannot claim CCA to create or increase a rental loss — only to reduce rental income to zero.
The principal portion of your mortgage payments — only the interest component is deductible. Personal use portions of expenses: if you rent one room in your primary home, only the proportionate square footage percentage of expenses is deductible. Land value in the purchase price: only the building is depreciable, not the land. Capital improvements (adding a bathroom, finishing the basement, new kitchen) — these are added to the property's adjusted cost base, not expensed immediately. Losses from arrangements that are not commercial in nature.
CRA requires you to keep all supporting documents for 6 years from the end of the tax year they relate to. Keep: bank statements showing all rent received, all expense receipts with date, vendor name, amount, and purpose, your lease agreements, insurance policies, and T776 filed returns. Open a dedicated bank account and credit card exclusively for the rental property — this makes annual accounting dramatically simpler and is considered best practice by most real estate accountants.
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Read All ReviewsThese guides are written for Canadian buyers, sellers, renters, and landlords and are kept current for 2026. They are for informational purposes only — not legal, tax, or financial advice. Rules vary by province; confirm details with your lawyer, accountant, or licensed real estate professional before making decisions.