A Complete Guide to CRA Rental Income in 2024

Owning rental property in Canada can be a great source of passive income, but understanding how the CRA rental income rules work in 2024 is crucial to staying compliant and avoiding unnecessary penalties. Whether you're new to property rental or a seasoned landlord, this guide will break down what you need to know about reporting rental income, eligible deductions, and updates from the Canada Revenue Agency (CRA).

What Is CRA Rental Income?

CRA rental income refers to the earnings you receive from renting out property, such as houses, condos, apartments, or even part of your primary residence. According to the Canada Revenue Agency, any amount you earn from tenants must be reported on your personal or business tax return, depending on how you structure your rental activity.

Rental income includes not just the base rent, but also any other payments you receive, such as:

• Utilities paid by the tenant

• Parking fees

• Laundry machine usage fees

• Advance rent or deposits (if kept)

Changes to CRA Rental Income Reporting in 2024

In 2024, the CRA has emphasized stricter enforcement around undeclared rental income. Increased data-sharing with digital platforms and provincial registries has made it harder to avoid detection. Landlords are now more likely to be audited if they fail to report rental income accurately.

Key updates include:

• Digital income tracking: CRA now uses AI tools to identify rental income patterns from online listings.

• Short-term rental disclosure: Platforms like Airbnb and Vrbo must report user income to the CRA directly.

• Principal residence rules: Renting out a portion of your primary residence may affect your principal residence exemption.

How to Report CRA Rental Income

For individual landlords, rental income is reported on Form T776 – Statement of Real Estate Rentals and included in your personal income tax return. If you co-own a property, each owner's portion of income and expenses must be reported according to your ownership percentage.

Deductible Expenses for Landlords

To reduce your taxable rental income, the CRA allows landlords to deduct eligible expenses. Here's a list of common deductions:

• Mortgage interest (but not principal payments)

• Property taxes

• Insurance premiums

• Utility costs (if paid by you)

• Repairs and maintenance

• Property management fees

• Advertising for tenants

• Accounting or legal fees

Ensure you keep all receipts and records, as the CRA may request documentation during a review or audit.

Repairs vs. Capital Improvements

Understanding the difference between repairs and capital improvements is important when claiming deductions:

• Repairs are immediate deductions (e.g., fixing a leaky faucet).

• Capital improvements (e.g., adding a deck or replacing a roof) must be depreciated over time through Capital Cost Allowance (CCA).

However, applying CCA reduces the Adjusted Cost Base (ACB) of the property, which may increase your capital gains tax if you sell the property later. Consult with a tax expert before claiming CCA.

GST/HST Considerations for Rental Income

Generally, long-term residential rentals are exempt from GST/HST. However, short-term rentals or commercial property rentals may be subject to GST/HST rules. If you earn over $30,000 annually from taxable supplies (including short-term rentals), you must register for a GST/HST number and charge the tax to your tenants.

Common CRA Rental Income Mistakes

To avoid issues with the CRA, steer clear of these common mistakes:

1. Failing to report all rental income

2. Claiming personal expenses as rental deductions

3. Ignoring co-ownership income splits

4. Misclassifying capital improvements as repairs

5. Forgetting to report Airbnb or short-term rental income

When Should You File Your Rental Income?

Your rental income must be included in your annual tax return. For individuals, the deadline is April 30, 2025. If you're self-employed (including as a rental business), the filing deadline is June 15, 2025, but any taxes owing are still due by April 30.

Record Keeping Requirements

The CRA requires landlords to keep financial records for at least six years after the end of the tax year. These records should include:

• Lease agreements

• Rent receipts

• Expense invoices

• Bank statements

• Mortgage documents

Keeping organized records is your best defense in case of a CRA audit.

Final Thoughts: Get Professional Support

Navigating CRA rental income rules can be complex, especially with the changes introduced in 2024. Working with an experienced tax advisor ensures your rental income is reported accurately and that you take full advantage of deductions legally available to you.

At Tax Headaches, we specialize in helping property owners like you understand the ins and outs of CRA rental income reporting. Whether you manage a single suite or a multi-property portfolio, our expert team can support you with personalized tax solutions that reduce your stress and maximize your refund.