What rental expenses can I claim to reduce my rental income?
Expenses you can deduct:
- Advertising – including advertising fees and finder’s fees
- Insurance – home insurance premium paid for your rental property
- Interest and bank charges – interest charges on money you borrow to buy or improve your rental property. You can also deduct certain fees when you get a mortgage or loan to buy or improve your rental property
- Professional fees – includes accounting fees
- Management and administration fees – you can deduct the amounts paid to a person or a company to manage your property. You can also deduct amounts paid or payable to an agent for collecting rent or finding new tenants
- Repairs and maintenance – you can deduct the cost of labour and materials for any minor repairs or maintenance done to the rental property. You cannot deduct the value of your own labour
- Property taxes
- Utilities – you can deduct expenses for utilities, such as gas, oil, electricity or cable if your rental arrangement specifies that you pay for the utilities for your rental space or units.
- Travel and motor vehicle expenses
If you own one rental property, you can deduct reasonable motor vehicle expenses if you meet all of the following conditions:
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- You receive income from only one rental property that is in the general area where you live
- You personally do part, or all, of the necessary repairs and maintenance on the property
- You have motor vehicle expenses to transport tools and materials to the rental property
You cannot deduct motor vehicle expenses to collect rent if you have only one rental property
If you own two or more rental properties:
In addition to the expenses listed above, you can deduct reasonable motor vehicle expenses for any of the following:
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- Collecting rent
- Supervising repairs
- Managing the properties
What expenses cannot be claimed as rental expenses?
Expenses you cannot deduct:
- Land transfer taxes. You cannot deduct land transfer taxes when you bought your property. Add these amounts to the cost of the property
- Mortgage principal. You cannot deduct the repayments of principal on your mortgage or loan on your rental property
- Value of your own labor
- Agent and legal fees paid to buy or sell your rental property. The fee will be deducted on the calculation of capital gain or loss when selling your rental property
I rent out a portion of my home. How can I claim rental expenses?
If you rent part of your home, you can claim the expenses related to the rental area of the building.
For example, you rent one room of your four-room house, you can deduct:
- 100% of the expenses related only to the rented room, such as repairs and maintenance of the room
- 25% of the expenses related to the whole houses, such as property tax and insurance
I earn rental income from vacant land. What expenses can I deduct?
If you are not earning any income from the land, you cannot deduct your mortgage interest, property tax or any other expenses to create a loss. You cannot add these expenses to the adjusted cost base of your land.
If you are earning rental income from the land, you can deduct interest and property tax. You cannot create a rental loss by claiming a deduction for the interest or property taxes. They can be added to the cost of the land. This will decrease your capital gain when you dispose of the land.
