Generally speaking, expenses incurred in the year to maintain or repair rental property are considered current expenses and may be deducted from your rental income.

Deductible current expenses

Current expenses that can be deducted from your rental income include:

• advertising expenses incurred to attract tenants
• insurance premiums and property taxes respecting the rental property
• interest on loans taken out to purchase, maintain or improve the rental property
• borrowing costs or expenses incurred to get a mortgage loan (e.g. insurance required by the lender) or any other loan for the purpose of purchasing, maintaining or improving rental property (these costs or expenses are deductible in equal amounts over a five-year period; if the loan is repaid before the end of the five-year period, any portion of the borrowing costs or expenses not previously deducted can be deducted for the year in which the loan is repaid in full)
• maintenance and repair costs incurred to restore a building to its original condition, such as expenses incurred to replace all the windows of your building or to restore its balconies, roof or plumbing to their former condition (if you did the repairs yourself, you can deduct the cost of materials but not the value of your labour)
• expenses for landscaping the grounds around the property, except for the construction of sidewalks, paths, parking areas and retaining walls, if the property is used primarily to earn rental income
• the cost of bookkeeping services and fees paid to have books and accounting records audited
• legal fees (except those related to the purchase or sale of the property)
• salaries, wages and other remuneration paid to persons responsible for maintaining or operating the property
• the cost of heat, electricity, water and Internet

Expenses for the construction, renovation or alteration of a building

Expenses you incur for the construction, renovation or alteration of a building to make it suitable for rent are generally included in the capital cost of the property.

However, these expenses may be deducted from your rental income for the taxation year up to the amount of the rental income from the building for the year. Such expenses include:

• interest charges
• legal fees
• accounting fees
• property taxes

The expenses must relate to the building or the land it is on, meaning:

• the land on which the building is situated
• the land adjoining the building that is necessary for the building's use (where the adjoining land is to be used, for example, for a parking area, driveway, yard or garden)

We consider the construction, renovation or alteration to be completed on whichever date is earlier:

• the date the work is completed
• the date 90% or more of the building is rented