Can I claim motor vehicle expenses towards rental property income?

1. If you own at one rental property you can deduct reasonable motor vehicle expenses if you meet all the following conditions:

• you receive income from only one rental property that is in the general area where you live;
• you personally do part, or all, of the necessary repairs and maintenance on the property; and
• you have motor vehicle expenses to transport tools and materials to the rental property.

You cannot deduct motor vehicle expenses you incur to collect rents. These are personal expenses.

2. If you own two or more rental properties: In addition to the expenses listed above, you can deduct reasonable motor vehicle expenses you incur to do any of the following:

• collect rents;
• supervise repairs; and
• generally manage the properties.

This applies whether your rental properties are located in or outside the general area where you live. However, your rental properties have to be located in at least two different sites away from your principal residence. The CRA will assess the reasonableness of your motor vehicle expenses depending on the circumstances.

ABOUT THE AUTHOR

ALLAN MADAN

CA.CPA.CGA

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.

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