Every expense Canadian landlords can deduct on Schedule T776 to reduce rental income taxes.
One of the biggest advantages of owning rental property in Canada is the ability to deduct operating expenses against rental income. Understanding what you can and cannot deduct — and how to document it — can meaningfully reduce your annual tax bill. This guide covers every major deduction category for Canadian landlords in 2025.
The interest portion of your mortgage payments is fully deductible. The principal repayment is not deductible. Your lender will provide an annual mortgage statement showing the interest paid each year — use this number on T776.
Municipal property taxes are fully deductible in the year paid. If you pay into a property tax installment account, deduct the amounts actually paid (or accrued, if using accrual accounting) during the tax year.
Landlord insurance, fire insurance, liability coverage, and rental income protection insurance are all deductible. Keep your insurance policy documents and payment records. If you have a multi-year policy, prorate the deduction to the coverage year.
Current repairs that restore the property to its original condition are deductible. Examples include:
If you hire a property management company, their fees are fully deductible. Typical fees range from 8–12% of gross rent. This includes tenant placement fees, monthly management fees, and lease renewal fees.
Costs to find tenants are deductible:
If you pay utilities on behalf of tenants, these are deductible: hydro, gas, water, heat. If utilities are included in rent, they are deductible. If tenants pay their own utilities, you cannot deduct them.
Costs to maintain the exterior and common areas are deductible — lawn care, snow plowing, garbage removal, and cleaning of common areas or between tenants.
Fees paid to accountants for preparing rental income statements or T776, and legal fees for lease agreements or tenant disputes, are deductible. Legal fees to purchase the property are not deductible — they are added to the cost base.
If you manage the rental yourself, reasonable office expenses are deductible: paper, postage, pens, printer ink used for rental administration. Keep it proportional and documented.
Travel to inspect, maintain, or manage your rental property is deductible. You can claim either the actual vehicle expenses (prorated for rental use) or the CRA's prescribed per-kilometre rate. Keep a mileage log with date, destination, and purpose.
Landlord software, rental property management apps, and relevant professional membership fees may be deductible if used for the rental business.
If you borrow money to make improvements to a rental property, the interest on that loan is deductible — even if the improvement itself must be capitalized (added to the cost base).
CCA is the tax system's version of depreciation. Rental buildings are Class 1 (4% declining balance). You can claim CCA to reduce rental income but not to create or increase a rental loss. The downside: all CCA claimed is recaptured (fully taxed as ordinary income) when you sell.
If you pay a family member a reasonable salary for managing the rental (e.g., doing repairs, handling tenant calls), the amount is deductible — provided it is genuinely paid, reasonable for the services rendered, and reported as employment income by the family member.
| Deduction | Deductible | Where on T776 |
|---|---|---|
| Mortgage interest | Yes | Line 8710 |
| Property taxes | Yes | Line 8790 |
| Insurance | Yes | Line 8690 |
| Repairs and maintenance | Yes (current) | Line 8960 |
| Property management | Yes | Line 8871 |
| Advertising | Yes | Line 8520 |
| Utilities | Yes (if paid) | Line 9220 |
| Travel | Yes | Line 9200 |
| Legal and accounting | Yes | Line 8860 |
| Office expenses | Yes | Line 8810 |
| CCA | Yes (caution) | Line 9936 |
| Capital improvements | No (capitalize) | Add to ACB |
| Mortgage principal | No | N/A |
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Get KOHO Free — Use Code 45ET55JSYACanadian landlords have access to a wide range of tax deductions that can significantly reduce net rental income. The key is careful documentation and understanding the difference between current and capital expenses. Work with a tax professional who understands real estate to ensure you're claiming everything you're entitled to while staying compliant with the CRA.