Landlord tax deductions in Canada: what you can write off

Rental income is taxable in Canada — but so are the costs of earning it. The Canada Revenue Agency (CRA) allows landlords to deduct "reasonable" expenses incurred to earn rental income, which can significantly reduce the tax you owe each year.

The key word is reasonable. The CRA expects expenses to be directly tied to the property, properly documented, and not mixed with personal use. Here's a practical breakdown of what qualifies.

Expenses you can deduct in full

These costs are deductible in the year you pay them, as long as they relate to your rental property.

Mortgage interest

You can deduct the interest portion of your mortgage payments — not the principal. The principal is paying down an asset you own, so it's not a deductible expense. Your mortgage statement or lender will break this out for you at year-end.

Property taxes

Municipal property taxes are fully deductible in the year you pay them. If you pay through your mortgage (escrowed), use the amount your lender actually remitted to the municipality, not what you paid into the mortgage account.

Insurance premiums

Your landlord or rental property insurance premium is deductible. Home insurance on a property you live in is not deductible — only the policy covering the rental unit.

Repairs and maintenance

Routine repairs are deductible in the year you pay them. This includes:

• Fixing a broken appliance
• Patching drywall after a tenant moves out
• Replacing a faucet or toilet
• Repainting after normal wear and tear
• Pest control

The test the CRA applies: does the repair restore the property to its original condition, or does it improve it? Restoring = deductible. Improving = capital expenditure (see below).

Property management fees

If you use a property manager or software to manage your rental, those fees are deductible. This includes management commissions, leasing fees, and subscription costs for property management tools.

Accounting and legal fees

Fees paid to an accountant to prepare your rental income statement, or to a lawyer for lease drafting or tenant disputes, are deductible. Legal fees related to purchasing or selling the property are not — those are capital costs.

Advertising costs

The cost of listing your rental on platforms, running ads to find tenants, or hiring a photographer for listing photos is deductible.

Utilities paid by the landlord

If you pay for water, heat, electricity, or internet as part of the lease arrangement, those costs are deductible. If the tenant pays utilities directly, you cannot deduct them.

Landscaping and snow removal

Routine maintenance of the grounds — lawn care, snow plowing, seasonal cleanup — is deductible as a maintenance expense.

Capital expenses: deduct over time, not all at once

Some improvements cannot be deducted immediately. If you make a significant upgrade to the property — replacing the roof, installing a new furnace, renovating a kitchen — the CRA treats this as a capital expenditure. You recover the cost over several years through the Capital Cost Allowance (CCA) system.

Common capital expenditures:

• Roof replacement
• New HVAC system
• Major renovation (kitchen, bathroom)
• New flooring throughout the unit
• Adding a new room or structure

The line between repair and capital improvement is one of the most common areas of CRA scrutiny. If you're unsure, document your reasoning and consult your accountant.

Expenses you cannot deduct

• Principal mortgage payments — you're paying down debt, not incurring a cost
• Personal portion of a mixed-use property — if you live in part of the property, only the rental portion of expenses is deductible (usually allocated by square footage)
• Land — land does not depreciate, so it's never eligible for CCA
• Your own labour — you cannot pay yourself for work you do on the property and then deduct it
• Penalties and fines — CRA penalties, parking tickets, or bylaw fines are not deductible

The home office rule for landlords

If you manage your rentals from a dedicated home office, you may be able to deduct a portion of your home expenses (internet, heat, electricity, rent or mortgage interest on your home) as a business expense. This applies only if the space is used exclusively and regularly for managing the rental business.

This is one of the more commonly audited claims — document it carefully.

How to track everything

The CRA expects you to keep records for six years from the end of the tax year they relate to. That means receipts, invoices, bank statements, and contracts — not just a spreadsheet.

At a minimum, track:

• Date and amount of every expense
• What property it relates to
• The vendor or payee
• What the expense was for

If you have multiple properties, keep expenses separated by property. Mixing them is a common mistake that makes audits painful.

What triggers a CRA audit

The CRA flags rental income returns that show:

• Large or recurring losses (especially if you claim the property is rented but show losses every year)
• Expenses that seem high relative to the rental income reported
• CCA claims on land (not allowed)
• Inconsistent income from year to year with no explanation

Keeping clean, property-by-property records is the best defence. If you're ever contacted by the CRA, being able to produce receipts quickly tends to resolve things faster.

Onsite tracks monthly rent and payment history across all your properties, so your income side is always organized. For expenses, your accountant will still need receipts — but having clean income records is half the battle.