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Rental Income Calculator Canada 2025

Calculate your net rental income after deductible expenses, CCA depreciation, and compare holding property personally vs in a corporation.

Only mortgage interest is deductible on rental property, not principal repayment. Report rental income on Form T776.
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Gross monthly rental income
Used for provincial tax calculation
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Employment/business income (determines your marginal rate)
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Interest portion ONLY, not principal
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$
Current expenses, not capital improvements
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$
$
$
Travel to rental property for repairs, maintenance
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Estimates use 2025 federal + provincial rates. Not financial advice.

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How to Use This Calculator

Tab "Net Rental Income"

Enter your monthly rent, select your province, and enter your other annual income (employment, business, etc.) — this determines your marginal tax rate. Expand "More options" to enter your deductible expenses: mortgage interest, property tax, insurance, repairs, condo fees, and others. The calculator computes your annual net rental income, the tax owed at your combined marginal rate, and your after-tax cash flow.

Tab "CCA (Depreciation)"

Enter the building cost (excluding land — land is never depreciable), select the CCA class (Class 1 at 4% for most residential buildings), and enter your current UCC (Undepreciated Capital Cost). The calculator shows the CCA you can claim this year, your new UCC, estimated tax savings, and a 10-year depreciation schedule. Remember: CCA cannot create or increase a rental loss.

Tab "Incorporate vs Personal"

Enter your net rental income, other personal income, and province. The calculator compares the total tax burden of holding rental property personally (taxed at your marginal rate) versus through a corporation (taxed at the passive investment income rate of ~50.17%, then personal tax on dividends when extracting). It shows which path results in less total tax.

The Formulas

Net rental income (Form T776):
Net rental income = Gross rent (annual) - Total deductible expenses
Deductible expenses = Mortgage interest + Property tax + Insurance + Repairs + Condo fees + Utilities + Management + Advertising + Travel

Tax on rental income:
Tax = Tax(Other income + Net rental income) - Tax(Other income)
This captures the marginal rate effect — rental income is stacked on top of your other income.

CCA (Capital Cost Allowance):
CCA = UCC x CCA rate (4% for Class 1)
CCA claimable = min(CCA calculated, Net rental income before CCA)
New UCC = Old UCC - CCA claimed
Recapture on sale = Sale price - UCC (taxed as 100% income)

Corporate passive income tax:
Part I tax = 38% - 10% provincial abatement + 10.67% additional refundable tax = 38.67% federal
Combined with provincial: approximately 50.17%
RDTOH refundable portion returned when dividends paid to shareholders

Only mortgage interest is deductible — never the principal repayment portion. Capital improvements (new roof, addition, appliances over $500) are added to the building's capital cost for CCA purposes, not deducted as current expenses.

Example

David — Condo in Toronto, $2,500/month rent, $180K mortgage at 5.5%

David rents out a condo in Ontario. He earns $80,000 from his day job. His mortgage is $180,000 at 5.5% interest with 20-year amortization.

Gross rental income ($2,500 x 12)$30,000
Mortgage interest (year 1, approx.)$9,700
Property tax$3,500
Insurance$1,000
Condo fees ($400/mo)$4,800
Repairs & maintenance$1,000
Total deductible expenses$20,000
Net rental income$10,000
Combined marginal rate (ON, $90K total)~29.65%
Tax on rental income~$2,965
After-tax cash flow~$7,035

David keeps about $7,035 per year after tax from his rental property. His mortgage principal repayment (~$5,800 in year 1) is not deductible but builds equity. Note: he could also claim CCA on the building portion (excluding land) to further reduce taxable rental income to zero, but this would reduce his cost base and trigger recapture when he sells.

Frequently Asked Questions

You can deduct: mortgage interest (not principal), property taxes, insurance premiums, repairs and maintenance (current expenses, not capital improvements), utilities you pay as landlord, condo/strata fees, property management fees, advertising costs to find tenants, legal and accounting fees related to the rental, and travel expenses to the property for maintenance. All expenses must be reasonable and directly related to earning rental income. Report them on Form T776.
CCA is optional and strategic. Claiming CCA reduces your taxable rental income today but lowers your UCC (Undepreciated Capital Cost). When you sell, if the sale price exceeds the UCC, the difference is "recaptured" and taxed as 100% income — not at the capital gains rate. Many landlords choose not to claim CCA to avoid recapture. However, if you expect to be in a lower tax bracket when you sell (e.g., retirement), CCA can be beneficial. CCA can never create or increase a rental loss.
No. Rental income in a Canadian corporation is classified as passive investment income, not active business income. It is taxed at approximately 50.17% combined (federal Part I tax of 38.67% plus provincial tax). The small business deduction (~12% combined rate) does not apply. When you extract the after-tax money as dividends, you pay personal tax again, though the RDTOH mechanism provides a partial refund. For most small landlords, holding personally is simpler and often more tax-efficient.
Yes — with one important exception. If your deductible expenses (excluding CCA) exceed your rental income, the resulting loss can offset your employment income, business income, or other sources of income. However, CCA cannot be used to create or increase a rental loss. For example, if your net rental income before CCA is $5,000, you can claim up to $5,000 in CCA but no more. If your rental is already at a loss before CCA, you cannot claim any CCA that year.
Only the building portion qualifies for CCA — land is never depreciable. You can use the property assessment to determine the split: most municipalities assess land and building values separately. A common rule of thumb is 70-80% building and 20-30% land for condos, and 50-70% building for detached houses, but this varies widely by location. Use the municipal property assessment, an appraisal, or the allocation used on your purchase agreement. The CRA may challenge an unreasonable split.

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