If you earn income from renting out property in Canada, understanding how to report CRA rental income is essential. Whether you’re a first-time landlord or a seasoned investor, the Canada Revenue Agency (CRA) has strict rules on what must be reported, what deductions are allowed, and how to stay compliant. In this guide, we’ll break down what you need to know for 2024—from what qualifies as rental income to how to maximize your tax return legally.
What is CRA Rental Income?
CRA rental income is any money you earn from leasing out real estate such as houses, condos, rooms, or commercial units. It includes:
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Rent payments
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Security deposits (if kept)
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Fees for services like laundry or parking
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Short-term rental earnings (e.g., Airbnb)
All of this income must be reported on your T776 Statement of Real Estate Rentals, which forms part of your annual tax return.
Failing to report rental income can result in significant penalties and interest charges. The CRA has been increasing its surveillance on rental transactions, especially with the rise of digital platforms and short-term rentals.
What Expenses Can You Deduct?
One of the advantages of earning rental income is that you can deduct certain expenses from your gross income. Here are some common deductions:
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Mortgage interest (not the principal)
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Property taxes
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Repairs and maintenance
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Insurance premiums
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Utility bills (if you pay them)
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Management and administrative fees
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Depreciation (Capital Cost Allowance)
Make sure you keep detailed receipts and records. CRA may request documentation if they audit your file. Only expenses directly related to earning rental income are deductible.
How to Report Rental Income in 2024
To report your CRA rental income properly:
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Complete Form T776: This form calculates your rental income or loss. It also includes a breakdown of your allowable expenses.
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Include It in Your T1 Tax Return: The final result from your T776 is transferred to your personal income tax return.
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Claim Capital Cost Allowance (CCA) if needed: You can choose to claim depreciation on your rental property, which reduces taxable income—but beware, this may trigger a capital gain when you sell the property.
What if You Co-Own a Property?
If you co-own a rental property, each owner must report their share of the income and expenses. CRA typically expects you to divide it based on ownership percentage unless there’s a legal or contractual agreement specifying otherwise.
What About Short-Term Rentals?
Earnings from platforms like Airbnb or Vrbo must be declared just like long-term rental income. CRA is monitoring these closely, and platforms may even share data with tax authorities.
If you rent out part of your principal residence occasionally, you may still be eligible for the principal residence exemption—but only if certain conditions are met. Frequent or commercial-like use could jeopardize that status.
Common CRA Red Flags for Rental Income
To avoid triggering an audit or penalty, avoid these common mistakes:
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Not reporting all rental income, including cash payments
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Claiming personal expenses as rental deductions
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Inflating maintenance or repair costs
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Misclassifying capital improvements as repairs
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Claiming CCA without understanding the future implications
Changes for 2024 You Should Know
As of 2024, CRA has updated some reporting requirements:
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Digital platform reporting: New agreements require platforms to report host earnings directly to CRA.
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Beneficial ownership transparency: If your property is held through a trust or corporation, new disclosure rules may apply.
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GST/HST obligations: If your rental income exceeds $30,000 annually, especially from short-term rentals, you may need to register for and remit GST/HST.
Keeping Records Is Crucial
Keep all documents related to your rental property for at least six years. This includes:
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Lease agreements
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Invoices and receipts
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Bank statements
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Property tax bills
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Insurance policies
Organized record-keeping makes it easier to file and protect yourself in case of an audit.
Should You Incorporate Your Rental Business?
For landlords with multiple properties, incorporating can offer legal protection and tax planning advantages. However, not all rental activities qualify as active business income. Consult with a tax professional to determine the best strategy.
Final Thoughts
Managing your CRA rental income can seem complex, but it becomes manageable with the right knowledge and planning. Always ensure you report accurately, claim only legitimate expenses, and stay updated on CRA regulations.
If you’re unsure about your situation, working with a professional can save time, stress, and money. Whether you need help filing, understanding deductions, or handling CRA correspondence, expert guidance can make a big difference.
At Taxheadaches.ca, we specialize in helping Canadians navigate rental income rules, avoid penalties, and file accurately with confidence. Trust our expertise to take the guesswork out of your rental income reporting in 2024 and beyond.
