The impact of taxes on your rental property depends on who owns the property.  Normally, rental properties can be categorized in various ways:

1. Personally Owned - If the rental property is owned in your name it is considered a sole proprietorship. For this you would have to submit a form T776 Statement of Real Estate Rentals (which gives a summary of all your rental revenues and deductions) for each of the rental properties that you own.

2. Partnership - If you have multiple people, other than yourself, owning a property, CRA will consider you as co-owners. Similar to a sole proprietorship, a partnership is not a separate legal entity which means no separate tax return is needed.

‍

What Expenses Can I Deduct?

‍

As a rental property owner, there are expenses that you can deduct from your rental income for tax purposes even if your property is vacant. Tracking all your expenses for your rental property throughout the year can save you time during tax season.  According to the CRA, here are a list of deductible expenses:

·       Advertising

·       Insurance

·       Interest and bank charges

·       Office expenses

·       Professional fees (includes legal and accounting fees)

·       Management and administration fees

·       Repairs and maintenance

·       Salaries, wages, and benefits (including employer's contributions)

·       Property taxes

·       Travel

·       Utilities

·       Motor vehicle expenses

·       Other rental expenses

·       Prepaid expenses

‍

‍

Do I Need to Pay Income Tax on Rental Income?

‍

If the rental properties are owned as a Sole Proprietorship or Partnership, Yes. You must pay income tax in the same way that you pay for your income at your tax bracket. The net rental income would get added to your total income (line 15000) and you would be taxed appropriately based on which tax bracket your income would fall in.

‍

‍