Here’s what you need to know for taxpayers with rental income and expenses using form T776.Collected income from a Rental Property (T776 – Rental Statement)

Here’s what you need to know for taxpayers with rental income and expenses using form T776.

What is the T776?

The T776 is also known as the Statement of Real Estate Rentals, which allows you to declare rental income and expenses (e.g. own and rent real estate). This form allows you to calculate your gross income, deductible expenses and total net income or loss. The T776 only applies to income from a property where you rent space and provide basic services; however, if you are also providing additional services such as meals, cleaning or security services for your tenants, this income may qualify as business income and must be reported using T2125. 

Please be aware that you may be classified as a partnership if the rental property is co-owned and the CRA will ultimately determine whether your income is from rental property or business related depending on the services you provide. To help you complete your T776 tax slip, you can use the T4036 Rental Income guide, which includes:

Part 1 - Identification:

Here is where you report your basic information such as your name, address, city, and the fiscal period. You must specify whether it will be the final year receiving rental income or not. If appropriate, you must also enter your business number, percentages of the partnership, tax shelter identification number. In addition, if someone else is preparing the form, you are required to enter their name and address.

Part 2 - Details of co-owners and partners:

This section must be completed if the rental property is co-owned by you and a partner (can include up to three). In this section, you will provide the name and address of your partner(s), net income (or loss) and the ownership percentage. 

Part 3 - Income:

You must enter your income from the rental property in this section, which can be calculated using the accrual method or cash method. In this section, you are able to list each rental property, number of units and gross rent. There are three different lines in this section:

Line 8141 - total gross rent

Line 8230 - other income such as premiums, leases, etc.

Line 8299 - total gross rental income (8141 plus 8230) 

Part 4 - Expenses:

Any expenses that you have incurred to generate the rental income is declared in this section. These expenses can include: advertising, insurance, salaries, property taxes, repairs and maintenance, etc. In addition, you can also enter on line 9369 the total amount for the personal portion used (other than generating income), if appropriate. The expense section enables you to calculate the total deductible expenses required to determine the net rental income (or loss). Furthermore, you can calculate the share of income given to co-owners, terminal loss, and recaptured capital cost allowance. 

T776 has six more “Areas” starting from A through F as follows:

• Area A - Calculation of CCA (capital cost allowance) claim
• Area B - Equipment additions in the year
• Area C - Building additions in the year
• Area D - Equipment dispositions in the year
• Area E - Building disposition in the year
• Area F - Land additions and dispositions in the year

Do I need to fill out a T776?

The T776 form must be completed by any taxpayer who owns real estate property and generates rental income. This applies to property owners and co-owners for each fiscal year. As mentioned earlier, you need to complete this form if you provide rental space and basic services (e.g. heat, electricity); however, offering any additional services may qualify your income as business income and must be reported using T2125. Please keep in mind that if you are a co-owner or in a partnership, that you complete section 2 of the form. 

What expenses can I deduct on the T776 form?

The CRA allows taxpayers to deduct the following expenses on the T776:

• Advertising
• Interest and bank charges
• Insurance
• Property taxes
• Office expenses
• Professional fees (includes legal and accounting fees)
• Management and administration fees
• Repairs and maintenance
• Salaries, wages, and benefits (including employer’s contributions)
• Travel
• Utilities
• Motor vehicle expenses (not including capital cost allowance)

Where can I submit a T776?

The T776 form must be submitted for each fiscal year, beginning from January 1 to December 31 unless you have unique circumstances during the time you rented the property. This form is readily available on the CRA official website or by your tax software provider. You can also download a fillable/saveable version and mail the completed form to the appropriate tax centers. Alternatively, if you are in need of assistance filing and submitting, you can use a tax service like MyTaxHub to ensure the necessary steps are taken to complete your claim.