Rental income and the T776 for the 2025 tax year

01What counts as rental income

Gross rental income is the rent you were paid in the year. Cash and cheques and transfers, all of it, before any expense comes off. It goes on line 8299 of the T776.

It is not only money. The CRA guide says to include the fair market value of payment in kind, meaning goods or services taken instead of cash. If a tenant paints the hallway in exchange for a month's rent, the value of that month is still income, and the painting is an expense.

One classification matters before you start. Renting out property where you provide basic services only, such as heat, light, parking and laundry, is property income and belongs on the T776. Once you add services like cleaning, security or meals, the CRA may treat it as business income, which is a different guide and a different form.

For an ordinary long-term rental, you are on the T776.

02The expense lines on the T776

The form gives you a fixed set of lines. Putting a cost on the right line is not just neatness. It is how you remember what you claimed when the CRA asks three years later.

03Repair or improvement

This is the decision that changes your return the most, and the CRA guide gives you a set of questions rather than a rule.

Does the cost give a lasting benefit, or does it recur? A lasting benefit points to capital.

Does it restore the property to its original condition, or make it better than it was? Restoring is usually current. Improving is capital.

Is it a separate asset, or a part of the building? Replacing a whole asset points to capital. Fixing a component of the building points to current.

How big is the cost against the value of the property? A large amount points to capital.

The guide adds two traps. Repairs to a used property you have just bought, done to put it in a fit state, are capital. And repairs done to help you sell the property are capital too.

In plain terms: replacing three broken shingles is a repair. Replacing the roof with a better one is capital. Repainting a bedroom is a repair. Gutting the kitchen is capital.

04Capital cost allowance, in one section

Capital cost allowance is the tax version of depreciation. Instead of deducting the whole cost of the building, you deduct a percentage of what is left of it each year.

A rental building is usually class 1, at 4% a year, on the undepreciated balance. In the year you buy, you can normally claim on only half of your net additions to the class. That is the half year rule.

Land is never depreciable, so the land portion of the purchase price comes out before you start.

Two limits matter more than the arithmetic. Capital cost allowance cannot be used to create or increase a rental loss. And when you sell, the amounts you claimed can come back into income as recapture. The CRA guide explains recapture and terminal loss, and it is worth reading that part before you claim rather than after.

This is why a lot of small landlords do not claim it on the building at all. Ask an accountant about your own situation. It is one of the few places where the right answer genuinely depends on what you plan to do with the property.

05One year, worked through

Say you rent out a single unit for $2,100 a month for the whole year, with no vacancy.

06If you rent out part of your own home

The same form applies, but the expenses have to be split between the part you live in and the part you rent.

The CRA guide says to divide on a reasonable basis, using square metres or the number of rooms. Costs that belong only to the rented area can be claimed in full. Costs for the whole building, such as property tax and insurance, are claimed in the rented proportion.

So if you rent four rooms out of ten, you would claim everything spent only on those rooms, plus 40% of the whole building costs. Write the basis down once and use the same one every year.

07What to keep, and for how long

The CRA asks for detailed records of the rental income you earn and the expenses you incur, supported by invoices, receipts and contracts. Generally you keep them for six years from the end of the tax year they relate to.

For the 2025 tax year, most people had to file by April 30, 2026. Someone who is self-employed, or whose spouse is, had until June 15, 2026 to file, but any balance owing was still due April 30. Those dates have gone. If you find something you missed on a 2025 return, the fix is an adjustment request, not a second return.

The more useful move now is the one for the year you are in. The receipts you file today are the ones that decide next spring.

• Photograph every receipt the day you get it and file it against the property it belongs to.
• Decide repair or capital when you pay, not in April. You will remember what the work actually was.
• Keep the mortgage statement that separates interest from principal. Only the interest is deductible.
• Track expenses per property, not per portfolio. The T776 is filled out per property.
• Keep the closing documents for every purchase. The land and building split comes from there.

08Making next April shorter

None of the above is difficult. It is a record-keeping problem that only reveals itself once a year, which is exactly the kind of problem that gets put off.

How TenantBay helps: it records what was collected and what was spent per property against T776 line numbers, with the receipt attached behind each claimed expense, so the year-end total is a report rather than an evening with a shoebox.