How to claim vehicle expenses on your T2125 — mileage logs, CCA limits, lease caps, and a full car deduction calculator for Canadian real estate agents.
Updated March 2026 · Realtor vehicle deduction Canada · 7-minute read
Vehicle expenses are typically the largest tax deduction available to Canadian real estate agents. Realtors drive constantly — showing properties, attending listing appointments, visiting brokerages, attending board events, and driving to continuing education. Properly claiming your vehicle expenses can reduce your taxable income by $5,000–$15,000+ per year. Here is exactly how to do it correctly.
The CRA requires you to track both your total kilometres driven and your business kilometres driven for the year. Your vehicle deduction equals your actual vehicle costs multiplied by your business-use percentage.
Business-use % = Business KM ÷ Total KM × 100
For example: if you drove 28,000 km for business out of 38,000 km total, your business-use percentage is 73.7%. You can deduct 73.7% of all eligible vehicle costs.
The CRA can — and does — ask to see mileage logs during audits. Without a log, your vehicle deduction can be entirely denied. A compliant mileage log records: date, starting location, destination, business purpose, and kilometres driven for every business trip. Apps like MileIQ, Driversnote, or even a simple spreadsheet work perfectly. The CRA accepts electronic logs. Keep the log for six years from the tax year end.
| Expense | Deductible Portion | Notes |
|---|---|---|
| Fuel / Gas | Business-use % | Keep all gas receipts or use credit card statements |
| Car Insurance | Business-use % | Annual premium × business-use % |
| Maintenance & Repairs | Business-use % | Oil changes, tires, brakes, car washes |
| Parking (business trips) | 100% | Parking at client properties, offices — fully deductible |
| Licence & Registration | Business-use % | Annual vehicle registration fees |
| Lease Payments | Business-use % × lease (capped at $1,050/mo in 2025) | Monthly lease cap applies to luxury vehicles |
| CCA (owned vehicle) | Business-use % × CCA amount | Class 10 (30% declining) or Class 10.1 (capped) |
| Interest on Auto Loan | Business-use % (capped at $10/day in 2025) | Interest deduction has a per-day cap for passenger vehicles |
If you own your vehicle, you claim Capital Cost Allowance (CCA) instead of the purchase price itself. CCA is a depreciation deduction claimed over multiple years.
From a pure tax perspective, the answer depends on your business-use percentage and the vehicle cost. For high-use realtors (70%+ business use) driving luxury vehicles, owning allows you to claim full CCA on the business portion. For moderate-use agents, leasing simplifies the deduction calculation — you deduct the business-use portion of lease payments directly without tracking depreciation schedules.
The 2025 monthly lease deduction cap is $1,050 (plus tax). For a vehicle with a $1,500/month lease at 70% business use, you can deduct $735/month (capped at $1,050 × 70% = $735). See our Self-Employed Tax Guide for broader vehicle vs. lease analysis.
Commission cheques vary month to month — KOHO's free account helps you track spending, set aside HST, and manage cash flow without monthly banking fees cutting into your income.
Get KOHO Free — Code 45ET55JSYA