Landlord Income Tax in Ontario: 2026 Filing Guide

Rental income is taxable and requires careful reporting. A practical guide for Ontario landlords filing their 2025 returns.

Property Management in Ontario

Filing taxes on rental income requires understanding how Canada Revenue Agency treats rental income, what's deductible, and how to report it correctly on your T1 personal return. Errors — either under-reporting income or over-claiming deductions — create CRA audit risk that landlords should actively work to avoid.

Rental income must be reported on Form T776 (Statement of Real Estate Rentals), which is filed as part of your T1 personal return. This form captures gross rental income, allowable deductions, and net rental income or loss. Each property you own must be reported on a separate T776 if you have multiple rental properties.

Key Responsibilities and Best Practices

Allowable deductions include: advertising costs, insurance, interest on money borrowed to purchase or improve the property, maintenance and repairs, management and administration fees, motor vehicle expenses for visits to the property, office expenses, legal fees, property taxes, salaries to employees managing the property, and utilities.

The distinction between current expenses (fully deductible in the year paid) and capital expenditures (added to the Adjusted Cost Base or depreciated via CCA) is one of the most complex aspects of rental tax reporting. Replacing a broken furnace is current expense. Installing central air where none existed is a capital expenditure.

How D&D Property Management Helps

Capital Cost Allowance (CCA) allows you to claim depreciation on buildings (not land). Most residential buildings are in Class 1 (4% declining balance). Claiming CCA reduces current-year income but creates a larger recapture amount when you eventually sell. Many advisors recommend not claiming CCA on rental properties held long-term.

D&D Property Management provides clients with annual income and expense summaries organized by deduction category, simplifying the tax filing process. We recommend working with an accountant experienced in rental property to ensure your specific situation is handled correctly.

Devon Moore, Operations Lead Co-Founder & Operations Lead — D&D Property Management

Devon Moore is the co-founder and Operations Lead at D&D Property Management, managing rental properties across Kitchener-Waterloo, Cambridge, Guelph and Waterloo Region.