Rental income tax calculator for Canada

Province or territoryWhere you lived on 31 December. It sets your provincial tax.

Rent received in the yearAll rent for the year, before any expenses.CAD

Mortgage interestOnly the interest part of your payments. Principal is not deductible.CAD

Other deductible expensesProperty tax, insurance, repairs, utilities, condo fees, management.CAD

Capital cost allowance you want to claimOptional depreciation on the building. It cannot create a rental loss.CAD

Employment and other incomeYour salary or other income sets the bracket your rent is taxed in.CAD

Tax on your rental income

$2,819

Effective rate 31.3 %

Net rental income$9,000
Federal tax on rental income20.5 %−$1,845
Ontario tax on rental income9.15 %−$824
Ontario Health Premium−$150
Rent left after expenses and tax$6,182

An estimate under the rules for the chosen year, for typical cases. It is not tax advice: check the result with the tax office or an adviser before you file.

How it is calculated

Net rental income is the rent you collect minus deductible expenses: mortgage interest, property tax, insurance, repairs, utilities you pay, condo fees and management fees.

You can also claim capital cost allowance on the building, but only up to the net rental income. It cannot create a loss. The net amount is added to your other income and taxed at your marginal federal and provincial rates.

If your expenses are higher than your rent, the rental loss lowers your other income and saves you tax. The calculator shows the tax with and without the rental and the difference, split into federal tax, provincial tax and, in Ontario, the surtax and health premium.

You own the rental property alone, in your own name, and rent it out as an investment, not as a business with services.
Other income is treated as employment income, with CPP and EI credits, the basic personal amount, the Canada employment amount and, in Ontario, the LIFT credit for a single filer.
Deductible expenses include property tax, insurance, repairs, utilities you pay, management fees and mortgage interest. Mortgage principal is not deductible.
Capital cost allowance is entered as an amount. It is capped so it cannot create or increase a rental loss. CCA claimed may be recaptured when you sell.
A rental loss reduces your other income and so lowers your tax.
Capital gains on a later sale, GST/HST on short-term rentals and the Underused Housing Tax are not included.

Questions

Is rental income taxed at a special rate in Canada?

No. Net rental income is added to your other income and taxed at your normal marginal rate.

Can I deduct my mortgage payments?

Only the interest part. The part of each payment that repays the loan is not deductible.

Should I claim capital cost allowance?

It lowers tax now, but the CCA you claimed can be added back to income as recapture when you sell for more than the depreciated value. Many owners claim it only when their marginal rate is high.

Can a rental loss reduce my tax on my salary?

Yes, if you rent the property to earn income. A loss from interest and other expenses reduces your other income. CCA cannot be used to create that loss.

Sources

Now keep it on track Set the result as a budget in Spendee and see each month how much is left.

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