The CRA T776 for landlords

What is the T776?

The T776 is where you total your rental income and deduct the expenses of earning it, so you're taxed on the net profit, not the gross rent. You file one that covers your rental properties; a separate statement is used per property or grouped, depending on your situation.

Income you report

Gross rents received during the year, plus related amounts such as fees or recoverable costs you charged tenants. Report income in the year you receive it (most individuals use the cash-basis approach).

Expenses you can deduct

Reasonable costs of earning the rental income, including:

• Mortgage interest (not the principal portion), and other financing costs
• Property taxes, insurance, and utilities you pay
• Repairs and maintenance
• Property management and advertising for tenants
• Condo/strata fees, professional fees, and office/travel costs related to the rental

Current vs capital costs

A current expense keeps the property in its existing condition (fixing a leak, repainting) and is deducted in the year. A capital cost is a betterment or long-lived asset (a new roof, an addition, appliances) and is generally deducted over time through Capital Cost Allowance (CCA), not all at once. Getting the two right is one of the most common landlord tax questions.

A note on CCA (depreciation)

You can claim CCA on the building and some assets, but it's optional, and claiming it can create a "recapture" that's taxed when you sell. Many landlords weigh this with an accountant before claiming CCA on the building.

Keep good records all year

The T776 is easy when your rents and expenses are already tracked per property. Keep receipts, and separate personal from rental costs, especially if you rent out part of your home.