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Rental Income Tax Calculator

Estimate how much Canadian income tax you owe on rental property income for 2025, after deductible expenses.

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Deductible expenses include mortgage interest (not principal), property taxes, insurance, maintenance, management fees, advertising, and CCA (Capital Cost Allowance / depreciation). CCA cannot create or increase a rental loss — it can only reduce income to $0. Note: new Flipping Tax applies to property sold within 365 days of acquisition (treated as business income, no principal-residence or lifetime capital gains exemptions).

Extra Tax from Rental Income

Additional tax owed on rental profit
$0

How rental income is taxed

Rental income in Canada is added to your other income and taxed at your combined federal and provincial marginal rate. Unlike capital gains, 100% of net rental income is taxable. The good news is that many expenses are deductible: mortgage interest (not principal repayment), property taxes, insurance, repairs and maintenance, property management fees, advertising, and a portion of utilities if included in rent.

Capital Cost Allowance (CCA) — the tax equivalent of depreciation — can also reduce rental income. Buildings generally fall in CCA Class 1 at a 4% declining-balance rate. However, CCA cannot create or increase a rental loss; it can only reduce net rental income to zero.

If you have multiple rental properties, their incomes and losses are pooled. A net rental loss (after allowed expenses, but without CCA) can be deducted against your other income in the same year.

FAQ

Can I deduct mortgage principal payments?
No. Only the interest portion of your mortgage payment is deductible. The principal repayment increases your equity (part of the property's cost base) and is not an expense for tax purposes.
What is the "flipping tax" on properties?
Since January 1, 2023, profit from selling a property within 365 days of buying it is deemed business income (not a capital gain), so the 50% inclusion rate and principal-residence exemption do not apply. The full profit is taxable, with limited exceptions for life events like divorce or death.
Do I need to report rental income?
Yes — all rental income must be reported on your T1 return, regardless of whether you have a profit or loss. File Form T776 (Statement of Real Estate Rentals) with your return.
What if I rent a room in my home?
Renting a room in your principal residence creates partial rental income. A portion of home expenses (based on the percentage of the home rented) become deductible, but claiming CCA may affect your principal-residence exemption. Consider getting professional advice.