Rental Income Resources

Deductible Expenses for Rental Income

You can deduct any reasonable expenses you incur to earn rental income. These expenses are classified into two main types:

• Current expenses

• Capital expenses

Expenses You Can Deduct

Here are the expenses that can be deducted:

Line 8521 – Advertising

You can deduct advertising expenses, including:

• Advertising in Canadian newspapers

• Advertising on Canadian television and radio stations
  You can also include any amount paid as a finder's fee.

Line 8690 – Insurance

You can deduct the premiums you pay on your rental property for the current year. If your policy covers more than one year, you can only deduct the premiums related to the current year. The remaining premiums should be deducted in the applicable future years.

Line 8710 – Interest and Bank Charges

You can deduct the interest charged on money you borrow to purchase or improve your rental property.
If you have interest expenses related to construction or renovation, refer to "Construction Soft Costs."

Line 8810 – Office Expenses

You can deduct the cost of small office items, such as:

• Pens

• Pencils

• Paper clips

• Stationery

• Stamps
  Note: Capital items like calculators, filing cabinets, desks, and chairs are not deductible under office expenses.

Line 8860 – Professional Fees

You can deduct legal and accounting fees incurred for:

• Preparing leases

• Collecting overdue rents
  However, legal fees for purchasing the rental property cannot be deducted from rental income. Instead, allocate them between land and building costs and add them to their respective cost basis.

Line 8871 – Management and Administration Fees

You can deduct fees paid to individuals or companies for:

• Managing your rental property

• Collecting rents

• Finding new tenants

Line 8960 – Repairs and Maintenance

You can deduct the cost of labor and materials for minor repairs or maintenance to your rental property.
Note: You cannot deduct the value of your own labor or costs for capital repairs. However, you may claim Capital Cost Allowance (CCA) for capital improvements.

Line 9060 – Salaries, Wages, and Benefits

You can deduct amounts paid to employees, such as:

• Superintendents

• Maintenance personnel
  Note: You cannot deduct the value of your own services.

Line 9180 – Property Taxes

You can deduct property taxes you paid for the rental property during the period it was available for rent.
For example, taxes on the land and building where your rental property is located are deductible.

Line 9200 – Travel

You can deduct travel expenses incurred for:

• Collecting rents

• Supervising repairs

• Managing your rental properties
  Note: Travel expenses do not include personal expenses like board and lodging.

To claim travel expenses, ensure you meet the same requirements as those discussed under Line 9281 – Motor Vehicle Expenses.

Line 9220 – Utilities

You can deduct utility expenses, such as:

• Gas

• Oil

• Electricity

• Water

• Cable
  Note: Only deduct utilities if your rental arrangement specifies that you pay for utilities in your rental space or units.

Line 9281 – Motor Vehicle Expenses (excluding CCA)

You can deduct motor vehicle expenses under the following conditions:

• If you own one rental property:
  You can deduct reasonable motor vehicle expenses if:

  • The rental property is in the general area where you live

  • You do some or all repairs and maintenance yourself

  • You incur motor vehicle expenses for transporting tools and materials to the rental property
    Note: You cannot deduct motor vehicle expenses for collecting rents.

• If you own two or more rental properties:
  In addition to the above expenses, you can deduct motor vehicle expenses incurred for:

  • Collecting rents

  • Supervising repairs

  • Managing your properties
    This applies even if your rental properties are located outside the general area where you live, as long as they are in at least two different locations.

Line 9270 – Other Expenses

You can claim other expenses necessary for managing your rental property.

Capital Cost Allowance (CCA)

You may acquire depreciable property, such as a building, furniture, or equipment, for use in your rental activities. While you cannot deduct the full cost of these properties in the year of purchase, you can deduct their cost over several years through Capital Cost Allowance (CCA).

How Much CCA You Can Claim

The CCA you can claim depends on the type of property and when it was acquired. Group your depreciable property into classes, each with a specific CCA rate.

Common CCA Classes

• Class 1 (4%): Rental buildings (varies by material and acquisition date) and their parts, such as:

  • Electric wiring

  • Lighting fixtures

  • Plumbing

  • Heating and air-conditioning equipment

  • Elevators and escalators

• Class 8 (20%): Includes certain property like:

  • Furniture

  • Household appliances

  • Equipment costing over $500

  • Fixtures and machinery used in rental operations
    (e.g., photocopiers, fax machines, and other electronics)

• Class 10 (30%): General-purpose electronic data processing equipment (e.g., computers and systems software). Also includes motor vehicles and some passenger vehicles.

• Class 10.1 (30%): Passenger vehicles costing over $34,000 (for vehicles purchased in 2022). Each vehicle in this class must be listed separately.

• Class 31 (5%) and Class 32 (10%): Multi-unit residential buildings (MURBs) certified by the Canada Mortgage and Housing Corporation (CMHC), meeting specific criteria.

For More Information

For additional details, visit the Canada Revenue Agency (CRA) website at:
www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4036/rental-income.html#P632_58016