Rental Income Tax
What counts as rental income, how it is taxed, co-owners, renting to family, GST/HST and non-resident landlords.
The short version
- Rent you receive is taxable. You report gross rent and deductible expenses on form T776, and the net amount is added to your other income and taxed at your marginal rate.
- Rental income includes more than monthly rent: parking and laundry income, lease cancellation payments you receive, and the value of services a tenant gives you instead of rent.
- Co-owners each report their share. A security deposit isn't income until you keep it.
- Renting to family below market rent is allowed, but if the rent doesn't cover the costs, you generally can't claim a loss.
- Long-term residential rent is exempt from GST/HST. Short stays (under a month) and commercial rent can be taxable.
Rental Income Tax in Canada
Rental income is one of the few kinds of income where CRA expects you to do the bookkeeping, the accounting and the plumbing. Nobody sends you a slip. You add up the rent, subtract what it cost to earn it, and report the result. Done right, a lot of the rent is sheltered by expenses. Done wrong, the losses get reversed in a review and the interest bill arrives a few years later.
What Counts as Rental Income
| Received | Rental income? |
|---|---|
| Monthly rent, including rent paid in advance for this year | Yes, line 8141 of T776 |
| Parking, storage, laundry or vending income from the property | Yes, line 8230 (other income) |
| A tenant's payment to cancel a lease early | Yes |
| Services instead of rent (a tenant who paints in exchange for a month free) | Yes, at the value of the services |
| Security or damage deposit | Only when you keep it (to cover damage or unpaid rent) |
| Insurance proceeds for lost rent | Yes |
| A roommate or family member sharing costs at no profit | Generally not rental income (and no expenses either) |
Short-term rentals through Airbnb and similar platforms have their own rules; see Airbnb taxes.
How Much Tax on Rental Income?
Net rental income is added to your other income. Example: an Ontario landlord with a $75,000 salary rents a condo for $2,400 a month.
| Item | Amount |
|---|---|
| Gross rent ($2,400 x 12) | $28,800 |
| Mortgage interest, property tax, condo fees, insurance, repairs | ($21,300) |
| Net rental income before CCA | $7,500 |
| Tax at about 29.65% (Ontario marginal rate at that income) | about $2,225 |
Rental income isn't self-employment income, so there's no CPP on it. Nothing is withheld, though, so a profitable rental can push you into quarterly instalments. Your rate is on marginal tax rate. Capital cost allowance (CCA) could bring the $7,500 down, possibly to zero, at the price of recapture when you sell; see rental property expenses.
Landlord? Get your T776 right
Enter your rent, expenses and how the property is owned. The SmartFile sorts repairs from improvements, works out the CCA decision, and fills in form T776 for you to check.
Rental Income or Business Income?
Most landlords earn rental income: they provide the space and basic upkeep. If you provide significant extra services, such as cleaning, meals, security or tours (a bed and breakfast, a motel), the income may be business income, reported on form T2125 and subject to CPP. The more services, the more likely it's a business.
Co-Owners, Partners and Spouses
- Co-owners (most couples and family members who buy together) each report their share of income and expenses on their own T776, usually in proportion to ownership.
- Partners in a rental partnership report their share of the partnership's income.
- Spouses: income generally follows the money. If one spouse paid for the property, the attribution rules can tax all the income in that spouse's hands, regardless of whose name is on title.
Renting to Family
Charging your kid or your parents less than market rent is legal and common. The tax consequence: if the rent doesn't cover your expenses because it's below market, CRA generally won't allow the loss, because there's no reasonable expectation of profit. Charge market rent and report it like any other tenancy, or charge a cost-sharing amount and claim no loss. Losses on a family rental are a classic review target.
Renting Part of Your Home
A basement apartment or a room counts. Report the rent, and deduct the rental share of shared costs (by floor area or rooms) plus costs that are only for the rental. Usually this doesn't affect your principal residence exemption, as long as you don't claim CCA on the house and made no structural changes.
Get your GST/HST set up right the first time
The GST/HST SmartFile runs both $30,000 tests on your sales, compares the quick method with the regular method, and fills in form GST74 if the quick method wins.
GST/HST on Rent
Long-term residential rent (a month or more) is exempt: you don't charge GST/HST and can't claim input tax credits. Commercial rent and short-term accommodation are taxable, and the $30,000 small supplier test applies; see the GST/HST small supplier rule. Building or substantially renovating a rental can create a self-assessment of GST/HST, and a matching rebate; Ontario owners can check OntarioHSTRebates.ca.
Non-Resident Landlords
If you live outside Canada and rent out Canadian property, 25% of the gross rent must be withheld and sent to CRA, unless you file form NR6 and agree to file a Canadian return (section 216). That's worth getting set up properly from the first month.
The filing mechanics, line by line, are on form T776 explained. Selling later? See capital gains on rental property. The overview is on rental property tax.
Rental Income Questions
Is rental income taxable in Canada?
Yes. Net rental income, which is gross rent minus deductible expenses, is added to your other income and taxed at your marginal rate. It is reported on form T776.
Do I pay CPP on rental income?
No. Rental income is property income, not self-employment income, so CPP does not apply. Income from a business that provides significant services, such as a bed and breakfast, can be different.
Is a security deposit rental income?
Not when you receive it. It becomes income if and when you keep it, for example to cover damage or unpaid rent.
Can I claim a rental loss if I rent to family below market rent?
Generally not. If the rent is below market and does not cover your expenses, CRA usually considers there is no reasonable expectation of profit and denies the loss.
Do I charge GST/HST on rent?
Not on long-term residential rent, which is exempt. Commercial rent and short-term accommodation can be taxable.
Sources: CRA, Guide T4036 Rental Income; Completing form T776. Checked October 2026. The example uses an approximate 2026 Ontario marginal rate from our rules engine. The attribution rules between spouses are summarized; they have exceptions.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.