Need help? Accounting for landlords →
Owning a rental property can be a good investment, but the tax paperwork catches many landlords off guard. This guide walks Quebec residents through what to report, what you can deduct and where the traps are, using one worked example.
What you report and where
You report rental income minus eligible expenses on the federal T776 (Statement of Real Estate Rentals) and the Quebec TP-128-V, both filed with your personal returns. If you co-own the property, each owner reports their share. Quebec landlords must also give tenants an RL-31 slip by the end of February, which tenants use to claim the Quebec solidarity tax credit.
Worked example
Suppose you own a duplex and collect $24,000 of rent in the year. Your eligible expenses are:
- Mortgage interest: $6,000
- Property taxes: $3,000
- Insurance: $1,200
- Repairs and maintenance: $1,800
- Condo or building fees: $2,400
Total expenses are $14,400, so your net rental income is $9,600. That is what gets taxed, at your marginal rate, not the $24,000 you collected. The mortgage principal you repaid isn’t an expense, even though it left your bank account.
Expenses you can generally deduct
- Mortgage interest, but not principal repayments.
- Property taxes, insurance, utilities you pay and condo fees.
- Repairs and maintenance, advertising and property management fees.
- Professional fees such as bookkeeping and tax preparation.
- Reasonable motor-vehicle costs for rental business trips, with a logbook.
Repairs versus improvements
Repairs that keep the property in its current condition, such as patching a roof or repainting, are generally deductible in the year. Improvements that add lasting value or extend its life, such as a new addition or a full roof replacement, are capital costs and generally can’t be deducted all at once. Getting this wrong is one of the most common reasons rental returns get adjusted.
Capital cost allowance (CCA)
CCA lets you deduct part of the building’s cost over time. It is optional, it generally can’t create or increase a rental loss, and claiming it reduces your cost base, so it can lead to recapture and extra tax when you sell. Many landlords choose not to claim it. Talk to us before deciding, particularly if you may sell soon or if the property is your principal residence in part.
Short-term rentals
Renting for less than 31 days at a time generally counts as tourist accommodation in Quebec and can require a registration (CITQ), collection of GST/QST on stays and the provincial accommodation tax. A platform may collect some taxes for you. Confirm the current rules with Revenu Québec, Tourisme Québec and your municipality before listing.
GST and QST
Long-term residential rent is generally exempt from GST and QST, so you don’t charge it, and you generally can’t claim input tax credits on the related expenses. Commercial rent is generally taxable. See our GST/QST guide.
Own property but live abroad?
Different rules apply, including 25% withholding. Read about non-resident landlords.
Record-keeping tips
- Keep one bank account for rent and expenses per property if possible.
- Save leases, receipts and mortgage statements for six years.
- Note the date and cost of any improvement for your cost base.
We prepare rental income reporting as part of our personal tax returns service, and landlords with several units can also use monthly bookkeeping. Contact us to get started.