Canada · Landlord tax guide
Form T776: Reporting Rental Income in Canada
If you earn rent from a property you own, you report it to the CRA on Form T776, Statement of Real Estate Rentals. This guide covers what to report, which expenses you can deduct, how capital cost allowance works, and the records to keep so tax time is painless.
The form
T776
Filed with your personal income tax return, one per rental property (co-owners report their share).
What goes on the T776
The T776 calculates your net rental income or loss: the rent you received (gross rental income) minus the expenses you incurred to earn it. The result flows onto your personal tax return. If you co-own a property, each owner reports their share of the income and expenses.
Expenses you can usually deduct
Current expenses, the costs of running the property and keeping it in its existing condition, are generally deductible in the year you pay them:
- Mortgage interest (not the principal portion of your payments)
- Property taxes and insurance
- Utilities you pay for the tenant
- Repairs and maintenance that restore the property, such as fixing a leaky tap or repainting a room
- Advertising for tenants
- Condo fees
- Property management fees, and legal and accounting fees
Current vs capital expenses
The CRA separates expenses into two groups. A current expense restores the property to its original condition and is deductible right away. A capital expense improves the property beyond its original condition or extends its useful life, such as a new roof, a kitchen renovation or new windows. Capital expenses are not deducted in one year; they are claimed gradually through capital cost allowance.
Capital cost allowance (CCA)
CCA lets you deduct the cost of the building (and other depreciable property) a little each year. Most residential rental buildings fall in Class 1, at 4% a year on a declining balance. Land is never depreciable.
- Claiming CCA is optional. You choose how much to claim each year, up to the maximum.
- In the year you buy the property, the half-year rule limits CCA to half the normal amount.
- CCA cannot create or increase a rental loss.
- CCA claimed can be taxed back (recaptured) when you sell, so weigh it against your long-term plans.
How to prepare your T776
- 1
Total your rent received
Add up all rent collected for the year for the property, including any other rental income such as parking or laundry.
- 2
Sort your expenses
Group receipts into the T776 categories and split out anything that is a capital improvement.
- 3
Decide on CCA
Work out the Class 1 amount for the building and decide how much, if any, to claim this year.
- 4
Allocate personal use
If you live in part of the property, deduct only the portion of shared expenses that relates to the rented area.
- 5
File and keep records
Include the T776 with your return and keep your receipts and records for at least six years.
Keep records as you go
Most T776 headaches come from rebuilding a year of receipts in April. Recording rent and expenses by property and category throughout the year, with receipts attached, makes the form a copy-and-paste job.
Frequently asked questions
Do I need a T776 if I rent out a room in my home?
Generally yes, if you earn rental income. You report the rent and deduct only the share of expenses that relates to the rented space.
Can I deduct my mortgage payments?
Only the interest portion. The principal portion reduces your loan balance and is not an expense.
Is a new roof deductible?
A new roof is usually a capital expense, so it is claimed over time through capital cost allowance rather than deducted in one year.
How long should I keep my rental records?
The CRA generally requires you to keep supporting records for six years from the end of the tax year they relate to.
T776-ready records, all year
Automanagement tracks rent and expenses by property and category, with receipt uploads and reports that line up with the T776. Built for Canadian landlords.
General information for landlords, not legal or tax advice. Rules change; confirm the current requirements with the Canada Revenue Agency. Last reviewed 2026-09-28. Official source