Real Estate & Rental Tax (T776)

Typically no, home office expenses must be directly related to earning rental income. CRA generally does not allow home office deductions for rental properties unless you have a separate office space used exclusively for rental property management activities. Personal home office expenses are generally not deductible against rental income. However, if you maintain a dedicated office space in your personal residence that is used exclusively for managing rental properties, a portion of home office expenses may be deductible. The space must be used regularly and exclusively for rental activities, and the deduction is limited to the portion of home expenses attributable to that space. We can help determine if your situation qualifies and calculate any allowable home office deductions.

Yes, we calculate optimal depreciation using capital cost allowance (CCA). CCA allows you to claim depreciation on capital property used to earn rental income, such as buildings, appliances, and improvements. We determine the appropriate CCA class for each asset, calculate the maximum allowable CCA claim, and consider factors such as recapture implications and future sale considerations. Strategic CCA planning involves balancing current deductions with future recapture when the property is sold. We help optimize CCA claims to maximize current tax benefits while considering long-term tax implications. The calculation considers the cost of capital assets, applicable CCA rates, and any prior year CCA claims to determine the optimal depreciation strategy for your rental property.

We calculate the adjusted cost base (ACB), allocate selling expenses, and determine the capital gain or loss for accurate reporting. Property sale reporting requires calculating the ACB, which includes the original purchase price, capital improvements made over the years, and certain costs such as legal fees and land transfer taxes. We then subtract the ACB and selling costs from the sale proceeds to determine the capital gain. If CCA was claimed, recapture may apply, which is included in income. We ensure all components are properly calculated and reported on the T776 and T1 return. Accurate ACB calculation is critical, as errors can result in incorrect capital gain reporting and potential CRA reassessments. We coordinate with BC Home Flipping Tax services if applicable to ensure comprehensive property sale reporting.

Deductible rental expenses include costs incurred to earn rental income, such as mortgage interest, property taxes, insurance, utilities (if paid by landlord), repairs and maintenance, property management fees, legal and accounting fees, advertising costs, and travel expenses for property management. Capital improvements are not immediately deductible but qualify for CCA. Personal expenses or expenses not related to earning rental income are not deductible. For mixed-use properties, expenses must be allocated between personal and rental use based on the proportion of rental use. Proper documentation is essential to support all expense claims. We help identify all deductible expenses, ensure proper categorization, and maintain documentation to support your claims in case of CRA review.

Mixed-use properties require careful allocation of expenses between personal and rental use. We determine the rental use percentage based on factors such as square footage, number of rooms, or time used for rental purposes. Expenses such as mortgage interest, property taxes, insurance, utilities, and maintenance costs are then allocated based on this percentage. Only the rental portion of expenses is deductible against rental income. The allocation must be reasonable and supportable, as CRA may review mixed-use allocations. We help establish a defensible allocation method, maintain documentation to support the allocation, and ensure consistent application year over year. Proper mixed-use allocation is critical for accurate T776 reporting and reduces the risk of CRA reassessment.