If you rent out property in Canada, Form T776, Statement of Real Estate Rentals is the form that turns a year of rent, repairs and mortgage interest into a number on your tax return. It is not complicated. It is just unfamiliar, and most landlords meet it once a year in a hurry.
Here is what it actually asks for.
This is tooling, not tax advice. The CRA's own guide is the authority, and a situation with co-owners, a change of use, or a property you also live in is worth an accountant's half hour.
What the form is for
T776 reports the income and expenses of a rental property, and produces one number: your net rental income or loss. That number flows to your T1 return. If you own the property with somebody else, the form also records each person's share, and each of you reports your own portion.
The CRA publishes the form itself and a companion guide:
The guide is genuinely readable and worth twenty minutes once. It is where the edge cases live.
The income half
Gross rents are the rent you were entitled to receive in the year. Two things that trip people up:
- A refunded payment is not income. If a payment came in and went back out, it should not be sitting in your gross rents.
- A last month's rent deposit is not rent yet. It becomes rent in the month it is applied. Until then it is money you are holding.
Both of those are bookkeeping problems, not tax problems. They only become tax problems when nobody tracked them during the year and somebody adds up bank deposits in April.
The expense half
The form gives you named lines rather than a free-text box, and the lines are the useful part because they tell you what the CRA expects to see separated:
- advertising
- insurance
- interest and bank charges
- office expenses
- professional fees
- management and administration fees
- maintenance and repairs
- salaries, wages and benefits
- property taxes
- travel
- utilities
- motor vehicle expenses
- other expenses
Two of these carry most of the arguments.
Interest, not the mortgage payment. Only the interest portion of a mortgage payment is deductible. The principal is not an expense at all. It is you buying more of the building, which is why it shows up in your net worth rather than on your tax return.
Repairs, not improvements. Fixing the furnace is a repair. Replacing the furnace with a better one is usually a capital expense, which is a different mechanism entirely, described next.
Capital cost allowance, and why many landlords skip it
Capital cost allowance (CCA) is how you deduct the cost of the building itself, and of things like appliances, a little each year rather than all at once. The CRA explains it here: Capital cost allowance for rental property.
Two facts worth knowing before you decide:
- CCA cannot create or increase a rental loss. It can bring your net rental income to zero, not below it.
- It can come back later. Claiming CCA on the building can trigger recapture when you sell, and it interacts with the principal residence exemption if the property was ever your home.
That second point is why plenty of small landlords deliberately do not claim CCA on the building even though they could. It is a real decision with a real trade-off, and it is exactly the kind of question worth asking an accountant once rather than guessing annually.
What your software should be doing about this
Almost all of the work is bookkeeping done during the year, not tax work done in April. If your records are per property, in exact amounts, with each expense already sorted into the category the form asks for, the form is a transcription job.
That is the shape Wealthru builds toward. Rent, payments and expenses are recorded per property through the year, grouped to the T776 lines, and available as a year-end package you can file from or hand to your accountant. Refunded money is excluded from your rental income rather than quietly inflating it, because the ledger knows the refund happened.
The part no software should do is decide the CCA question for you.
The short version
- T776 turns a year of rent and expenses into one number.
- Only mortgage interest is deductible, never the principal.
- Repairs and improvements are different things with different treatment.
- CCA is optional, cannot create a loss, and has consequences when you sell.
- Everything hard about the form is really a bookkeeping habit, not a tax skill.
Read the CRA guide once, keep clean records per property, and April stops being an event.