What you can (and cannot) expense as a BC landlord

Rental income is taxable, but only your net rental income — after legitimate expenses. The list of what counts is more generous than many landlords realize, and stricter than some hope. Here’s the honest version.

This page is general information, not tax advice. For your specific situation, talk to an accountant.

Fully deductible (current expenses)

These reduce this year’s rental income on CRA form T776:

• Mortgage interest — the interest portion only, on money borrowed to buy or improve the rental
• Property taxes for the rental period
• Insurance premiums on the rental
• Repairs and maintenance — restoring things to original condition (labour you pay for, plus materials)
• Strata/condo fees
• Utilities — if your lease makes you, the landlord, responsible for them
• Advertising for tenants
• Property management and accounting fees
• A reasonable share of vehicle/office costs in narrower cases — rules get strict here; document everything

If you rent out part of your own home, deduct only the rental-use portion (by area and time), not the whole bill.

Not deductible — don’t try

• Mortgage principal. Ever. The interest line on your annual mortgage statement is the deductible number.
• Your own labour. You can deduct the materials for the deck you rebuilt; your weekend is worth $0 to the CRA.
• The personal-use share of anything.
• Land transfer tax and purchase closing costs as current expenses — they’re part of the property’s capital cost.
• Penalties and fines.

Claiming these anyway risks reassessment, repayment with interest, and gross-negligence penalties. The CRA’s own cannot-deduct list is short and blunt — match it.

Repairs vs. capital: the line that matters

Fixing the broken railing = repair, deduct now. Replacing the roof, gutting the bathroom, adding a suite = capital expense, deductible only gradually via Capital Cost Allowance (CCA). Two CCA traps worth knowing before you claim it: CCA cannot create or deepen a rental loss, and CCA claimed on the building is recaptured into income when you sell. That deferred tax bill surprises a lot of sellers — many landlords skip building CCA entirely on purpose.

Keep the ledger

Every number above survives an audit only if documented: receipts, invoices, your mortgage’s annual interest statement, and a simple ledger of rent received (the checklist’s rent ledger step exists for exactly this reason). Records must be kept for six years.