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Rental Income and expenses: T776 - Statement of Real Estate Rentals

Types of Rental Income

Rental income is income you earn from renting property that you own or have use of. You can own the property by yourself or with someone else. Rental income includes income from renting:
  • houses;
  • apartments;
  • rooms;
  • space in an office building; and
  • other real or movable property.

Rental income can be either income from property or business. Income from rental operations is usually income from property. Use this guide only if you have rental income from property.

You can find CRA information regarding rental income here: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/126/menu-eng.html

Enter Rental Income & Expenses:

If you received income from renting real estate or other real property, you have to file a statement of income and expenses. You report the rental income you earned in the calendar year (from January 1 to December 31).

If you are a partner and you have T5013 slips, enter the amounts from your T5013 slip in the T-slips entry screen. If you are a partner and you do not have T5013 slips complete Form T776 using the partnership financial statements.

Complete a separate Form T776 for each rental property you have. You can prepare up to 18 separate rental statements.


Enter Rental Income & Expenses - T776  Statement of Rental Income 

  1. Click the Personal Tax Profile Tab at the top of the Interview screen
  2. On Page 1, check Yes for the Question "Did you have self-employment, rental, investment (bank interest, dividends, stock or bond sales), or other income?"
  3. In the list that appears, check the box that says I have rental property that I received income or incurred expenses from.
  4. This will ensure that the Rental property questions are added to the interview. You will then be asked to enter the property information when you proceed through the Income section of the return.
  5. Once you reach the Rental Section, complete the Identification section.

    TurboTax completes the Period section. All rental properties have a December 31 year-end. If this is the first year of operation, enter the year, month, and day your rental operation began (see Set overrides for details on changing this amount).
     
  6. Enter your partnership identification number, tax shelter identification number, and business number, and indicate the type of ownership (sole proprietor, partnership, or co-ownership) and your percentage of ownership. TurboTax enters the industry code automatically.
     
  7. If you are a co-owner or member of a partnership:
    1. Enter your percentage of ownership in the Identification area, and complete the Details of other co-owners and partners portion, including the co-owners/partners percentage of ownership.
    2. Enter the address and gross rental income for the entire property in the Income section. Do not split the gross income according to your ownership share.
    3. Enter the amount of deductible expenses you have as a co-owner or partner, whichever applies, that you did not deduct elsewhere on the form. Do not enter expenses if you were reimbursed for them.
    4. Enter the total amount of undepreciated capital cost (UCC), additions and dispositions on page 2. See Calculation of Capital Cost Allowance below.
    5. If you rent out part of the building that you live in, you can only claim the portion of your expenses that relate to the rented part of the building.

      For lines 8521 to 9270, enter the full amount of expenses in the Total expense column, and enter your personal percentage in the Personal % column. The allowable deductible expenses are entered on line b.
       
  8. If you have other expenses as a partner or co-owner, subtract your personal portion before entering them on line 9945 or 9943.
     

TurboTax performs the calculations on lines 9369 to 9946 of the T776 based upon the type of ownership. TurboTax also transfers the appropriate amounts to lines 126 and 160 of your T1 General.

A fleur de lys symbol in a field on a federal form indicates that you can enter a different value on the corresponding Québec form. See Québec if Different Value for more information.

 

Cost Sharing

You may have questions about whether or not you should claim rental income received from relatives or friends that live with you, and whether or not you can also claim rental expenses. This depends on the type of rental agreement you have with the tenant.

Cost Sharing - Think of cost sharing as charging your relative/tenant a small amount per month to help with groceries, utilities, or general household upkeep. The amount charged would be far less than market value for the rental on the open market. In cases like this, you would not report the income from the cost sharing, but you also would not be allowed to claim any rental expenses.

  • In Cost-Sharing arrangements, the Property owner cannot claim a Rental Loss. If you lose money because you are renting a property to a relative for a lower rate than you would rent it to other tenants, you cannot claim a rental loss

    • When your rental expenses are consistently more than your rental income, you may not be allowed to claim a rental loss because your rental operation is not considered to be a source of income.

      However, you can claim a rental loss if you are renting the property to a relative for the same rate as you would charge other tenants and you reasonably expect to make a profit.
       
  • NOTE: In cost-sharing situations like this, the tenant will not be able to claim any tax benefit from Rent paid, or any of the Rental tax breaks provided, such as a portion of the Ontario Trillium Benefit.
     

If you charge a tenant fair market value for the rental, and expect to make some form of profit, you should report all rental income received, and you claim rental expenses consistent with the nature of the rental arrangement.

 

Other Helpful Resources

Check out these sites to get more help and information regarding your real estate income and expense questions.

 




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