How do I report my client's rental income on the T776, line by line?
Rental income is reported on Form T776 for the calendar year. Gross rents for the whole property go on line 8141, total gross rental income on line 12599 of the T1, and net income or loss after CCA goes from line 9946 to line 12600. Co owners report full gross rents but only their share of net income.
Which T776 lines carry the income and the net figure?
Rental income is reported for the calendar year, January 1 to December 31, and every rental property has a December 31 year end. The CRA accepts other financial statements but asks for Form T776 canada.ca.
| Line | What goes there |
|---|---|
| 8141 | Gross rents for all units, paid in cash or by cheque |
| 8230 | Other income, such as rent paid in kind or with services, at fair market value |
| 8299 | Total gross rental income, carried to line 12599 of the T1 |
| 8521 to 9281 | Current expenses (see the next table) |
| 9949 | Personal portion of expenses, for all owners |
| 9365, 9366, 9367 | Short term rental portion, and the noncompliant expenses and CCA you cannot deduct |
| 9369 | Net income (loss) before adjustments: line 8299 minus deductible expenses |
| Amount 2 | A co owner's share of line 9369 |
| 9945 / 9943 | Other expenses of the co owner / of the partner |
| 9947 / 9948 | Recaptured CCA / terminal loss |
| 9936 | Total CCA claim for the year |
| 9974 | GST/HST rebate for partners received in the year |
| 9946 | Your net income (loss), carried to line 12600 of the T1 |
Two lines trip people up. Line 12599 takes the gross income of the whole property, and the CRA says not to split it by ownership share. Line 12600 takes your client's own net figure from line 9946, with a loss shown in brackets canada.ca.
Which expenses go where, and which ones are capital?
Each current expense has its own line on Part 4, and most carry one rule that gets missed canada.ca.
| Line | Expense | The trap |
|---|---|---|
| 8521 | Advertising | Finder's fees count here |
| 8690 | Insurance | On a multiyear policy, deduct only the current year's premium |
| 8710 | Interest and bank charges | Interest on money borrowed to buy or improve the property; a mortgage prepayment penalty is spread over the remaining term |
| 8810 | Office expenses | Pens, paper, stamps; a desk or filing cabinet is capital |
| 8860 | Professional fees | Legal fees on the purchase are not deductible; split them between land and building cost |
| 8871 | Management and administration | Property manager fees, agents who collect rent or find tenants |
| 8960 | Repairs and maintenance | Labour and materials for repairs; your client's own labour is never deductible |
| 9060 | Salaries, wages and benefits | Includes the employer share of CPP and EI |
| 9180 | Property taxes | Only for the period the property was available for rent |
| 9200 | Travel | Collecting rent and supervising repairs; no board and lodging |
| 9220 | Utilities | Only when the rental arrangement says the landlord pays |
| 9281 | Motor vehicle | With one rental property, driving to collect rent is personal |
| 9270 | Other expenses | Condo fees, lease cancellation payments, landscaping (deducted in the year paid) |
The vehicle rule is the one clients argue with. With two or more properties at different sites away from the principal residence, vehicle costs to collect rent, supervise repairs and manage the properties become deductible canada.ca.
For current versus capital, Guide T4036 asks whether the outlay gives a lasting benefit, whether it maintains or improves the property, whether it's for a part of the property or a separate asset, and only then its value relative to the property. Painting a wooden house is current and vinyl siding is capital; repairing wooden steps is current and replacing them with concrete is capital. Repairs to fix a used property bought in poor condition, or to get one ready for sale, are capital canada.ca.
Renting part of a home means splitting shared costs. In the guide's example, an owner renting 3 of 12 rooms deducts 25% of property taxes, electricity and insurance, and 100% of the advertising that relates only to the rented rooms. The personal part goes on line 9949 canada.ca.
Why CCA cannot create or increase a rental loss
Regulation 1100(11) caps the CCA on rental property classes at the taxpayer's net rental income for the year: income from rental properties owned, plus the taxpayer's share of partnership rental income, minus rental losses, all computed before CCA laws-lois.justice.gc.ca. So the cap is tested on all rental properties combined, not property by property.
The CRA's own example: building 1 earns $1,500 and building 2 earns $2,000 before CCA, while building 3 loses $4,000. The combined result is a $500 loss, so no CCA can be claimed on any of the buildings or the appliances canada.ca. A partner includes the net rental income or loss from the T5013 slip in the same calculation.
Three more rules shape the claim. Each rental property acquired after 1971 that cost $50,000 or more goes in its own class, on its own line in Area A. Most buildings acquired after 1987 are class 1 at 4%, and land is not depreciable. In the year of purchase the half year rule generally limits the claim to half the net addition, but it does not apply to accelerated investment incentive property canada.ca. More on the classes is at rental property CCA, and what happens on sale is at recapture and terminal loss.
Worked example: a condo owned 50/50 by two spouses
Two spouses own a rental condo equally. For the year it brings in $24,000 of rent. The condo is in its own class 1, and each spouse's share of the building's undepreciated capital cost is $150,000 (land excluded).
| Step | Whole property | Each spouse |
|---|---|---|
| Gross rents, line 8141 and line 12599 | $24,000 | $24,000 (not split) |
| Property taxes, line 9180 | $3,200 | |
| Insurance, line 8690 | $1,100 | |
| Mortgage interest, line 8710 | $9,800 | |
| Condo fees, line 9270 | $4,200 | |
| Repairs, line 8960 | $1,500 | |
| Total expenses | $19,800 | |
| Line 9369, net before adjustments | $4,200 | |
| Amount 2, share of line 9369 | $2,100 | |
| CCA available: $150,000 x 4% | $6,000 | |
| CCA claimed, line 9936 | $2,100 (capped) | |
| Line 9946, carried to line 12600 | $0 | |
| Undepreciated capital cost carried forward | $147,900 |
Each spouse enters only their share of the CCA in Area A canada.ca, and Regulation 1100(11) stops each claim at $2,100, so the extra $3,900 of available CCA simply stays in the class. If one spouse also owned a second rental that lost $3,000 before CCA, that spouse's combined result would be a $900 loss and the CCA claim would drop to zero.
Co owners versus partners
Most joint owners are co owners, not partners. The CRA says that owning a rental property together as an investment does not make a partnership, because a partnership needs a business carried on in common canada.ca.
A co owner fills in Part 2 with the other owners' details, reports the gross income of the whole property, enters their share of line 9369 at amount 2, and puts their own deductible expenses that aren't claimed elsewhere on the form on line 9945 canada.ca. Personal portions for all owners go on line 9949.
A partner in a partnership that files a T5013 fills in only a few fields of the T776, using the amount from box 110 of the slip (box 107 for a limited partnership) canada.ca. Line 9936 stays empty, because the partnership has already deducted CCA in that box
canada.ca.
Short term rentals: the noncompliant expense denial
ITA section 67.7 denies any deduction for a short term rental to the extent it is a noncompliant amount. A short term rental is a residential property rented or offered for rent for periods of less than 90 consecutive days. It is noncompliant when the province or municipality doesn't permit it at that location, or requires registration, a licence or a permit that it doesn't meet. The noncompliant amount is A x B / C: deductible amounts for the rental, times noncompliant days, divided by short term rental days laws-lois.justice.gc.ca.
The rule applies to outlays made and expenses incurred after 2023 laws-lois.justice.gc.ca. For 2024 only, a rental that met all registration, licensing and permit requirements by December 31, 2024 is treated as compliant, and the CRA can reassess outside the normal period to apply the denial
laws-lois.justice.gc.ca.
On the T776, the short term rental share of expenses goes on line 9365, Chart A produces the denied expenses for line 9366, and Chart B produces the denied CCA for line 9367 canada.ca. In the guide's 2025 example, a unit with $2,100 of expenses that was noncompliant for 30 of its 84 short term days loses $750 ($2,100 x 30 / 84); a second unit noncompliant for all 35 days loses its full $1,500
canada.ca. The full rules are at short term rental rules.
Sources
When does rental income belong on a T2125 instead?
When your client provides enough services that the rental becomes a business. Renting space with basic services like heat, light, parking and laundry is usually property income on the T776; the more services added, such as cleaning, security or meals, the more likely it is business income canada.ca. Business income goes on the T2125.
Can my client use the cash method on the T776?
Only if the result is almost the same as the accrual method. The guide allows cash accounting when your client has almost no amounts receivable and no expenses outstanding at year end; otherwise report rent when earned and expenses when incurred canada.ca.
Can a client claim a rental loss when renting to a relative below market rent?
No. If your client charges someone they know less than a stranger would pay, they cannot claim a rental loss. A loss is still allowed when the relative pays the same rent other tenants would and the rental is expected to make a profit canada.ca.
Does my client have to claim the maximum CCA?
No. Your client can claim any amount from zero to the maximum allowed for the year canada.ca. CCA claimed may come back into income as recapture when the property is sold, so a client with little other income may prefer to leave the class untouched.
General information for the tax year shown, not advice for a specific client. Confirm the facts before you file or remit.