Income and Expenses
On your income tax return, you can deduct expenses incurred to renovate, improve, maintain or repair your rental property.
In addition, you may deduct from your rental income any current expenditures you incurred during the year for the purpose of earning such income.
Note that expenses incurred for the purpose of acquiring, improving or making an addition to property are considered capital expenditures and are not deductible. However, you can spread your capital expenditures over a certain number of years and annually deduct the depreciation.
If you make a profit on the sale of rental property, you must report this profit on your tax return as capital gain.
If you decide to rent out the residence you own and live in, you are deemed to have disposed of it at fair market value and to have reacquired it immediately at the same price.