If you earn rental income from rental property that you own or co-own, you must include your net rental income when calculating the total income to report in your income tax return.You can deduct expenses incurred to renovate, improve, maintain or repair your rental property.

Expenses incurred during the year to earn rental income can be deducted if they are considered current expenses.

Note that expenses incurred for the purpose of acquiring, improving or making an addition to property are considered capital expenditures and are not deductible in the year they are incurred. They must instead be added to the capital cost of the property and may qualify for capital cost allowance.

Sale of rental property or change in use

Selling rental property can have tax consequences. For more information, see Capital Gains and Losses (IN-120-V).

If you decide to rent out a residence you own instead of living in it, or vice versa, certain rules apply. See Change in Use.