How to Fill Out T776 for Rental Income

What Is Form T776?

Form T776, Statement of Real Estate Rentals, is published by the Canada Revenue Agency (CRA) and is used to report income from renting out real estate properties. Whether you rent a house, apartment, condo, basement suite, or a single room in your home, you must report the rental income on your tax return using this form.

The form captures your gross rental income, eligible expenses, and calculates your net rental income or loss. The net amount is transferred to your T1 General Income Tax return, where it is included in your total income.

Who Needs to File T776?

You need to file T776 if you earn rental income from real estate in Canada. This includes renting out an entire property, renting a basement suite or room in your primary residence, renting a vacation property for part of the year, renting commercial or industrial real estate, or co-owning a rental property with others.

If you co-own a property, each co-owner reports their share of rental income and expenses on their own T776. The share is usually based on the ownership percentage unless a written agreement specifies a different arrangement.

Gross Rental Income

Gross rental income is the total rent collected from all tenants during the tax year, before deductions. This includes regular monthly rent, advance rent received during the year, lease cancellation fees, amounts tenants paid for services you would normally cover (such as utilities), and insurance proceeds for lost rental income. Report all gross rental income on line 8141 of the form.

Eligible Rental Expenses

Deducting eligible expenses is the key benefit of filing T776. These reduce your net rental income and the tax you owe.

Advertising

Costs of advertising your property for rent, including online listings, newspaper ads, and signage.

Insurance

Premiums for fire, theft, and landlord liability insurance on your rental property.

Interest and Bank Charges

Interest on money borrowed to purchase or improve the rental property, including mortgage interest. Also includes bank fees for a dedicated rental property account. Note: only the interest portion of your mortgage payment is deductible, not the principal.

Maintenance and Repairs

Costs of maintaining the property in its current condition: painting, fixing leaks, replacing broken fixtures, routine upkeep. Improvements that add value or extend useful life are capital expenses that go into CCA instead of being deducted as current expenses.

Management and Administration Fees

Fees paid to a property management company or for administrative services related to the property.

Property Taxes

Municipal property taxes (realty taxes) on the rental property.

Utilities

Heat, electricity, water, and internet costs you pay for the rental property.

Professional Fees

Legal fees for lease preparation, accounting fees for rental income tax preparation, and similar professional costs.

Travel

Reasonable travel expenses for visiting the property for maintenance, rent collection, or management. Keep a log of trips with dates, purposes, and distances.

Expenses You Cannot Deduct

• The cost of land (land does not depreciate)
• Mortgage principal payments
• Penalties paid to the CRA
• Personal expenses unrelated to the property
• The value of your own labour in maintaining the property

Capital Cost Allowance (CCA)

Capital Cost Allowance is the CRA's term for depreciation. It allows you to deduct the cost of the building (not the land) over several years. Rental buildings are typically in CCA Class 1 at 4% per year for buildings acquired after 1987.

Key CCA considerations:

• CCA is optional. You do not have to claim it, and in some years it may be better not to.
• CCA cannot create or increase a rental loss. You can only claim CCA up to the amount of net rental income before CCA.
• When you sell, previously claimed CCA may be "recaptured" and added to your income. Consider long-term implications.
• The half-year rule applies in the acquisition year, meaning you can only claim CCA on half the net addition.

For CCA classes and rates, see the CRA CCA for rental property page.

Step-by-Step Guide to Completing T776

Part 1: Identification

Enter your name, SIN, and fiscal period (usually January 1 to December 31). Indicate if this is your first year reporting rental income and any partnership or co-ownership details.

Part 2: Property Details

For each rental property, enter the address, number of units, your ownership percentage, and the year you acquired it. Multiple properties can be reported on the same form.

Part 3: Income

Enter gross rental income for the year. If you have multiple properties, report income from each separately and total them.

Part 4: Expenses

Enter each eligible expense on its designated line. The form has specific lines for advertising, insurance, interest, maintenance, management fees, property taxes, utilities, and other categories. Total all expenses.

Part 5: Net Income or Loss

Subtract total expenses from gross income. If you want to claim CCA, enter it on the designated line, remembering it cannot create or increase a loss.

Part 6: Capital Cost Allowance Schedule

If claiming CCA, list the property's class, the undepreciated capital cost (UCC) at the start of the year, additions or dispositions during the year, and your CCA claim amount.

Renting Part of Your Home

If you rent out part of your principal residence, such as a basement suite, claim only the proportional share of shared expenses. For example, if the rented area is 30% of total floor space, you can generally claim 30% of shared costs like property taxes, insurance, utilities, and mortgage interest.

Be cautious about claiming CCA on your principal residence. Doing so could affect your eligibility for the principal residence exemption when you sell. For details, consult the CRA principal residence page.

Rental Losses

If expenses exceed income, you have a rental loss. In most cases, this loss can offset other income on your return, reducing overall tax. However, the CRA may scrutinize persistent losses, especially if you charge below-market rent or rent to a family member. Ensure your rental activity has a reasonable expectation of profit.

Common Mistakes to Avoid

• Not separating land cost from building cost when calculating CCA
• Deducting capital improvements as current expenses instead of adding them to CCA
• Claiming 100% of expenses on a partially rented property
• Forgetting to report rental income entirely, which is a common audit trigger
• Not keeping receipts and records for all claimed expenses
• Using CCA to create a rental loss

Record-Keeping

Keep all rental property records for at least six years: rental agreements, expense receipts, bank and mortgage statements, and tenant correspondence. Good records make completing T776 easier and protect you during any CRA review. For newcomers managing rental properties, our tax filing guide provides additional context.

Related Guides

• How to File Schedule 7 for RRSP Contributions
• Guide to T778: Child Care Expenses Deduction
• How to File Your First Tax Return in Canada
• Understanding the Canadian Tax System for Newcomers
• Applying for the GST/HST Credit

Reporting rental income accurately on Form T776 is both a legal requirement and an opportunity to claim legitimate deductions that reduce your tax bill. By understanding which expenses qualify, how CCA works, and how to keep proper records, you can manage your rental property finances confidently and in full compliance with Canadian tax law.