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Accounting for rental property owners

One property or twelve, the questions are the same. What’s deductible, how should you hold it, and what happens when you sell.
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The problem

Repairs and improvements are not the same thing

One comes off this year’s income. The other gets capitalized and depreciated over time. Get the line wrong and you either overpay now or create a problem the CRA finds later.

Ownership structure gets decided by accident

Personally, jointly, or through a corporation. Most owners pick without analysis, then discover the consequences when they add a property or try to sell one.

Depreciation is a choice, not an obligation

Claiming capital cost allowance lowers your tax now and can create recapture when you sell. Whether that trade is worth it depends on your plans, which means someone should actually ask you about them.

What I do

  • T776 rental statements, properly prepared per property
  • Repair versus capital classification, with the reasoning documented
  • Capital cost allowance analysis, including whether claiming it is actually in your interest
  • Interest deductibility review, especially where financing has been refinanced or blended
  • Ownership structure analysis: personal, joint, or corporate
  • Disposition planning before you sell, not after
  • Bookkeeping across multiple properties, so each one's real performance is visible

What's different

Most owners can tell you their rent roll. Far fewer can tell you which property is actually earning its keep after financing, maintenance, vacancy, and tax. That per-property view is the part I care about, because it drives whether you buy another one or sell the one that’s quietly costing you.

I also flag the timing decisions early. Structure questions and disposition planning are cheap to think about a year ahead and expensive to fix after a deal closes.

Questions

I only have one rental. Do I need this?
Maybe not year one. But if you’re planning to add properties, the structure decision is easier to make before you’re unwinding something.
Sometimes yes, often no. It depends on your other income, your financing, and what you plan to do with the properties. Anyone who answers that question without asking about your situation is guessing.
Different rules apply, including on the GST/HST side, and they’ve been changing. Worth a specific conversation rather than an assumption.
Realtors and PRECs are covered on the professional services page. This page is for people who own property as an investment.

Mark Garcia, CPA · Kitchener-Waterloo, Ontario · Serving clients across Canada · CRA authorized representative