Real Estate Investment
Tax Deductions

Real Estate Investment Tax Deductions — What You Can And Cannot Claim

If you’ve made a real estate investment by purchasing a rental property then you will want to know all of the many tax deductions available to you.

 

If you collect rental income from investment property, you will want to complete Form T776. This is where you claim your rental income, and where you can also claim deductions against this income.

Here are some of the deductible expenses listed by Canada Revenue Agency:

• Property tax
  
• Repairs to the rental property
• Insurance coverage on the rental property. If your policy covers more than one year, you can only claim the expense that relates to the current year.
• Advertising costs accumulated while trying to fill your rental property.
• Legal, accounting, book keeping, and other professional fees.
• Office supplies, including small items like pens, paper, stamps, etc.
• If you employ a property manager or other staff you can deduct their salary/wages.
• Utilities — if your contract with the tenant specifies that you pay these expenses.
• Landscaping cost you spent on the rental property that year.
• Condominium feeds — if your rental property is a condominium unit, you can deduct the condominium fees from your rental income.

 

It is important to note that you cannot deduct the value of your own labour, whether it is doing repairs, landscaping, or any other work you may do on your rental property.

 

If you live in your income property you can only deduct expenses from the portion of the house that is rented. Other expenses are considered personal expenses.

 

Another big expense category you may be able to deduct is vehicle expenses. To qualify you must meet the following conditions:

 

If you own ONE rental property

• Receive income from only ONE rental property, which is in the general area where you live.
• You must personally do part, or all, of the necessary property maintenance and repairs.
• You have vehicle expenses you incur to transport tools and material to the rental property. This does not include motor vehicle expenses incurred while collecting rent.

 

If you Own TWO OR MORE rental properties you can additionally deduct expenses incurred while:

• Collecting rent
• Supervising repairs
• Managing properties

These expenses can be deducted whether your properties are in our outside your general area. However, the rental properties must be located in at least two different sites.

 

 

For a complete list of real estate investment deductions please visit Canada Revenue Agency.