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Tax Simplified

Rental income tax calculator (2026)

Estimate how much income tax you'll owe on rental income from a Canadian property. Enter your rent collected, deductible expenses, and other income to see your net rental income and the tax it triggers at your marginal rate.

Used to calculate your marginal rate

$

Rental income

Total rent received before any expenses

$

Deductible expenses

Interest portion only, not principal

$
$
$

Capital improvements are not deductible

$
$
$
$
$

Net rental income

$9,800

After all deductible expenses

Estimated tax on rental income

$2,906

At 29.65% marginal rate

Net cash after tax

$6,894

What you keep

Tax as % of gross rent

12.11%

Effective rate on $24,000

Income & expense breakdown
Gross rent$24,000
Mortgage interest−$8,000
Property tax−$3,500
Insurance−$1,200
Repairs & maintenance−$1,500
Net rental income$9,800

Not included in this estimate

  • • Capital cost allowance (CCA) — claiming CCA reduces rental income but affects principal residence exemption on sale
  • • Depreciation on appliances and furniture (separate CCA classes)
  • • GST/HST if applicable (short-term rentals under 30 days may be subject to HST)
  • • Land transfer tax and legal fees on acquisition (capitalized, not deducted)

Estimates based on 2026 federal and provincial tax brackets. Does not model AMT, refundable credits, or the interaction with other surtaxes. For tax advice specific to your property, consult a CPA.

How rental income is taxed in Canada

Rental income is taxed as ordinary income — it's added to your other income (employment, self-employment, investments) and taxed at your marginal rate for the year. There is no separate rental income tax rate.

What expenses are deductible?

CRA allows you to deduct reasonable expenses incurred to earn rental income, including:

  • Mortgage interest — the interest portion of your mortgage payment (not principal repayment)
  • Property taxes paid during the year
  • Insurance premiums for the rental property
  • Repairs and maintenance — routine upkeep, not capital improvements
  • Property management fees
  • Utilities you pay as the landlord
  • Advertising and listing fees
  • Accounting and legal fees related to the rental activity
  • Travel to collect rent or supervise repairs (with limits)

Capital improvements vs. repairs

Repairs maintain the property's current condition and are deductible in the year incurred. Capital improvements (a new roof, new furnace, addition) extend the property's useful life and must be depreciated via Capital Cost Allowance (CCA) rather than deducted immediately.

Rental losses

If your deductible expenses exceed your rental income, you have a net rental loss. This loss can generally be deducted against your other income (employment, investment), reducing your overall tax. However, CRA requires a "reasonable expectation of profit" — if your expenses are consistently higher than your rent and there's no realistic prospect of profitability, CRA can disallow the losses.

Short-term rentals (Airbnb, VRBO)

Short-term rental income (stays under 30 days) may be subject to GST/HST if your revenue exceeds the $30,000 small supplier threshold. Some provinces have additional provincial sales tax rules. This calculator covers income tax only — consult a CPA for GST/HST obligations.

Rental property tax gets complicated quickly

A real estate–focused CPA can help with CCA strategy, GST/HST registration, principal residence planning, and structuring multiple properties.

Find a real estate CPA →