The Ultimate Guide Rental Property Tax Deductions in Canada 2023-2024

Property Tax is often the silent investor killer, so today we are talking about the CRA and how you can use tax rebates to claim deductions and reduce the amount of taxes you pay. In this article, we will cover the tax rebates from the basic ones to the advanced one, and even include some pro tips for those serious real estate investors and those looking for a bigger tax return! Tax Due Date Pushed Back for 2024: April 30th

Property Ownership

Before determining how much of the rental income to declare, you need to identify if you are a sole owner or co-owner Sole owner – declare 100% of the income Co-owner – declare a portion of the income Rental Income Income received from tenants where you only provide basic services (e.g. heat, light, parking, laundry) Reported on T776 Business Income Income received from tenants where you provide additional services to (e.g. cleaning, security, meals) Reported on T2125

Basic deductions as a landlord

  • Property Management Fees – The fees you pay to your property manager are all tax-deductible; be sure to get a month end report of your property and its expenses.
  • Professional Fees – Accountant fees, legal fees, appraisals and property inspections etc. can all be expensed.
  • Repairs and Maintenance – All repairs and maintenance related to the property whether you do it yourself, hire someone or if you are a passive investor and it is included in the expenses that determine your investor distribution. Check with your accountant to find out if it’s an instant write off or a capital cost claim. Note, this also include gardening costs.
  • Utilities – Water, Garbage/Recycling Fees
Pro Tip: If your rental expenses > rental income, the loss will be taken off your total income on T776.

Deductions most landlord forget to claim

  • Condo Fees – Be sure to claim most of them at year end
  • Property Taxes – The property taxes of your rental unit can be expensed.
  • Interest Fees – The interest fees associated with your mortgage, related loans and credit cards expenses are all write offs. The mortgage interest and most operating costs are tax deductible against the rents received. For your credit cards or loans, the loans must be used for your rental property expenses in order to claim interest fees.
  • Insurance Premiums – An recurring expense that most landlords don’t claim
  • Home Office – You may write off a portion of your utilities, internet, interest on your primary residence mortgage, insurance, etc. directly related to the running of your real estate investment business. You also may be able write off all office expenses directly related to the running of your real estate investment business. Again your accountant will guide you as to what is applicable or not. This step is very important as you do not want to misreport when filing.
  • Depreciation – Depreciating your appliances and the like may be worth doing as they will need replacement at some point in the future. Your accountant will guide you through this process and may take care of that aspect in your tax return when filing. Even an older property can have significant depreciation benefits due to recently installed fixtures and fittings.
  • Bank Charges – Check your bank statement, this should also include any NSF fees from bounced checks.
  • Advertising Costs – Fees to market the rental unit can be deducted from your income. This include lease up fee or tenant placement fee

Tricky Items to be claimed, BE CAREFULY!

  • New Residential Property Rebate (the ULTIMATE tax deductions) – for brand new properties or properties undergone major renovation with the sole purpose of renting it out. The landlord must not live on the rental premises, then you may be eligible for a HST/GST tax rebate. Pro Tip: some investors use this strategy successfully and can even use the rebate as down payment for the next investment and rinse and repeat!
  • Travel – In addition to mileage and Vehicle Expenses mentioned below, you may be able to claim travel expenses. especially if you manage the property yourself and you live a long way from your investment property. Travel expenses related to attending professional development and continuing education. such as the UBC real estate courses regarding real estate investing may also be deductible.
  • Vehicle Expenses – Certain expenses for your vehicle can be written off such as; financing charges, fuel, maintenance, insurance, parking etc. as they relate to your accessing/maintaining your investment properties. Important note though, you need to maintain travel logs for your vehicle. (try apps such as TripLog or even MileIQ) and what you were doing so that you can claim the expense. CRA may request you to provide those logbooks!
property tax

Things you cannot claim as expense

  • Land Transfer Taxes (a deduction you can’t claim) – CRA is explicitly clear that landlords cannot claim this deduction.
  • Mortgage Principal Payment – You cannot claim mortgage payments on your tax return

Wrapping it up

As you can see, tax deductions go much further than property management fees and repairs and can end up in a hefty tax return. If you’re ever unsure about what you can, can’t, or should claim, consult with a CPA accountant. (by the way that’s a deduction too!). If you have an investment property and want help maximizing the investment return. Or if you are just an owner of a single property and want some guidance on all things property management. Reach out to the Refinity Homes team. 604-332-5255 or our email us

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