How to Prepare a Rental Form Watch Video
Allan Madan, CPA, CA
Find out how you can prepare a Statement of Real Estate Rental Form T776 as part of your personal tax filing. Read More…
Disclaimer
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.
ABOUT THE AUTHOR
ALLAN MADAN
CPA, CA
Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.
Hello, what happens when u don’t deduct CCA. Are there any benefits to it esp. When u sell the property . If you can pls highlight some pros and cons of CCA. I have 2 rental condos for past 3years and having been deducting CCA, am I losing out on it? Your response will be greatly appreciated Thanks
Hi Yusuf,
I prefer to deduct CCA on my rental properties, because I get an immediate tax savings. Why forego the deduction and give the government a tax-free loan?
You are correct in that you have to recapture the previously claimed CCA into your income in the year of sale. However, according to the ‘time value of money’ concept, claiming CCA is still worth it. This is because a dollar saved today by claiming CCA is worth a lot more than a dollar paid in taxes in the distant future where you sell your property.
Hello,
What you have posted online provides valuable information, and I really appreciate your sharing your expertise with everyone!
I have a question regarding a rental Strata unit I purchased in 2016. On Form T 776, I allocated the expenses related to purchase between the cost of the land and the capital cost of the building (Class 1 – 4%). But since the capital cost of the building is pretty substantial (around 227k), should I capitalize the included appliances (about $10000 in value) separately in Class 8 (20%)? What is the common practice for preparing a Form T 776 for a Strata unit? Thanks a lot for your help!
Hi, Wei. Yes, you should record the appliances separately from the building. Appliances should be added to CCA Class 8.
Thank you for providing so much useful information on your website. It’s definitely a helpful public service!
My question is how to enter expenses when the rental property is co-owned with a spouse. Should the statement show total expenses or only the portion that each spouse is responsible for. For example assuming the rental is owned 50/50 with the following *total* income/expenses:
Gross Rent: $30,000
Insurance : $1,000
Interest: $9,000
Property Tax: $4,000
Should the T776 forms show the numbers above or should they be multiplied by the percentage of ownership?
thanks
-Jani
Hi Jani,
Follow these 4 steps to properly report rental income and expenses on form T776, Statement of Real Estate Rentals:
Step 1: On Line 1, Part 4 enter the gross amount of the rents collected.
Step 2: On Part 4 enter the gross amount of the expenses pertaining to the rental property.
Step 3: On Line 8 enter the rental profit (i.e. gross rents collected less expenses).
Step 4: On Line 9 enter YOUR SHARE of the rental profit from Step 3 (i.e. 50% of the profit if you are a co-owner).
Alan – great website and very helpful ! If my family (Husband wife and 2 kids) are all co-owners (4 of us) are there any rules on how to establish the % of ownership ? It seems very subjective.
Hi Bruce,
Thank you for reaching out. You can split the ownership % anyway you want between you and your family members. Keep in mind that minors cannot enter-into-contract and so their ownership of the property should be held through a family trust. Furthermore, for income splitting purposes, the CRA will require that you allocate the income to the family members based on the financial contribution that each family member made toward the purchase of the property.
Thanks for the excellent, straight forward guide!
I have a rental property, 50/50 co-ownership with my wife, and have a question about CCA. If our adjusted cost base is $400, 000 for a condo we just bought, what would we put in each of our T776 forms in column 3 in step 8? Would I put $200, 000 in mine, and she put $200, 000 in hers? Also, can I claim CCA to reduce my rental income to zero for the year, while she does not? The reason would be that she doesn’t work, so won’t pay tax on her rental income.
Thank you!
You would put $200,000 on your form and she would put $200,000 on her form. You can claim CCA to the maximum amount allowed, and she does not have to claim any CCA if she doesn’t want to. This is because depreciation is a discretionary tax deduction.
Hello Madan team,
Great video! I am renting a house (making me a 0% property owner) and I am using one of the three rooms for Airbnb as means to reduce our rental expense, similar to having a roommate or subletting. Is it allowed to use a form T776 if we don’t own the property? and if so, can a % of the rent expense be used since % of the property is dedicated for Airbnb?
Hi Jay,
Yes, you should complete form T776 to report the rental income received and expenses incurred. You can deduct a portion (1/3) of the rent paid against the rental income received.
Hi Allan,
I have a question than you may be able to answer with your experience and background as an accountant. I’m currently a co-owner (50/50) of a rental property with my wife. But due to her small salary when the expenses during the year goes over her half of the total income I incur more expenses from my part and pay for the maintenance, insurance and other expenses. She only pay the mortgage and property taxes. How should this be reported in the t776?
Hi Marc-A,
If both you and your wife equally contributed to the purchase of the property, then the profits (revenues less expenses) must be allocated on a 50/50 basis to you and her.
I’VE 2 RENTALS. CAN I USE ONLY ONE T776 OR 2 T776 TO DO THE FILING.
I’VE USED 2 SEPARATE T776 FOR THE 2 UNITS, BUT UFILE SENT ERRORS SAYING I CAN’T SEND THE RETURN ELECTRONICALLY. PLS ADVISE AND THANK YOU
Hi Jenny,
Prepare two separate Forms T776, one for each property.
Hi there, we had a tenant move in last year in November. He paid us 2 months of rent. I have claimed the rent for November and December for the amount of $2200 on my tax return under T776. How would i add in the expenses since the tenant has lived there for only 2 months? I have utility bills and property tax. Lets say the property tax was $5000, would I only report 2 months worth of property tax expense for the tenants portion and utilities since we had the tenant for 2 months? thank you!!
Hi Mindy,
Only report 2 months’ worth of expenses since the tenant lived three for 2 months. However, if you advertised the unit for rent before the tenant moved in and after he left, then you can claim expenses for those months as well.