Rental Income and the GIS Income Test
The Guaranteed Income Supplement (GIS) is reduced by 50 cents for every dollar of income above zero — and net rental income counts in full against that test. There is no partial exemption for rental income the way there is for employment income (which has a $5,000 exempt amount).
This means senior landlords who rent out a basement suite, a second property, or even a room in their home must understand how that income affects their GIS entitlement.
How Rental Income Is Measured for GIS
The CRA uses net rental income from your tax return (Schedule T776 — Statement of Real Estate Rentals). This is gross rental receipts minus allowable expenses.
What counts as income
| Income Source | Counted for GIS? |
|---|---|
| Gross rent received | Base figure |
| Minus: allowable expenses (see below) | Reduces the counted amount |
| Net rental income | Yes — fully counted |
| Principal repayment on mortgage | N/A — not income or expense |
| Security deposits held | Generally not income until forfeited |
Allowable deductions that reduce net rental income
| Expense | Deductible? |
|---|---|
| Mortgage interest | ✅ Yes |
| Property tax | ✅ Yes |
| Insurance premiums | ✅ Yes |
| Repairs and maintenance | ✅ Yes (maintenance only; not capital improvements) |
| Property management fees | ✅ Yes |
| Advertising | ✅ Yes |
| Accounting and legal fees (rental-related) | ✅ Yes |
| Utilities paid by landlord | ✅ Proportionate share |
| Capital improvements (e.g., new roof, addition) | ❌ Not deductible in year — added to capital cost |
| Mortgage principal | ❌ Not deductible |
| Capital cost allowance (CCA) | ⚠️ Deductible but creates recapture — see below |
Example: How Net Rental Income Reduces GIS
Single senior, age 68, renting out a basement suite
| Item | Amount |
|---|---|
| Gross rent collected | $14,400/year ($1,200/month) |
| Property tax (portion) | −$1,800 |
| Insurance (portion) | −$600 |
| Mortgage interest (portion) | −$2,400 |
| Maintenance and repairs | −$800 |
| Net rental income | $8,800 |
With $8,800 of net rental income plus CPP of $6,000/year:
| Income Source | Annual |
|---|---|
| CPP | $6,000 |
| Net rental income | $8,800 |
| Total income for GIS | $14,800 |
| GIS reduction (50%) | −$7,400 |
| Maximum annual GIS | $13,043 |
| GIS received | ~$5,643 |
| Monthly GIS | ~$470 |
Without the rental unit, with only $6,000/year CPP, this senior would receive approximately $9,443/year in GIS (~$787/month) — significantly more. The rental unit provides $8,800 in gross benefit but costs $4,400 in GIS annually (at 50-cent clawback).
Net financial position:
| With Rental | Without Rental | |
|---|---|---|
| Rental income | +$8,800 | $0 |
| GIS reduction | −$4,400 | — |
| Net gain from rental | +$4,400/year | — |
The rental income is still beneficial — you net $4,400 more per year — but the “true” yield on the rental is effectively halved by the GIS clawback.
The CCA Problem: A Trap for GIS Recipients
Capital Cost Allowance (CCA) is the tax-deductible depreciation of your rental property. Claiming CCA reduces net rental income on your return — which preserves GIS in the current year. However, when you eventually sell the property, all previously claimed CCA is recaptured as taxable income in the year of sale.
Why this matters for GIS:
If you claimed $4,000/year in CCA for 10 years, you reduce reported rental income by $40,000 over that period — preserving perhaps $20,000 in GIS payments. But in the year you sell the property, $40,000 of recapture income appears on your return, potentially eliminating GIS entirely for that year and possibly the following year.
General advice for GIS-eligible landlords: Do not claim CCA unless you have a specific reason. The short-term GIS gain is often reversed in the year of sale.
If Rental Income Pushes You Over the GIS Threshold
The single-senior GIS threshold is approximately $22,056/year in 2026. If your combined income — CPP, rental income, investment income — approaches or exceeds this level, you may receive little or no GIS.
If your rental income is variable (e.g., seasonal rentals, occasional income), your GIS will fluctuate year to year based on what appeared on last year’s tax return.
Strategies when rental income is high
- Maximize allowable deductions — ensure all eligible expenses are claimed to reduce net rental income
- Understand the GIS timing — GIS is adjusted each July based on the prior year’s income; a high-income year means reduced GIS from July of the following year
- Request a GIS income estimate if your current-year income drops significantly compared to last year (e.g., a tenant leaves). Service Canada can adjust GIS based on current-year income rather than waiting for next year’s reassessment.
- Consider the GIS impact on rental property decisions — for seniors near the threshold, a modest rental income can cost more in GIS than it earns
Renting a Room in Your Own Home
If you rent a room in your principal residence, the rental income calculation is the same: gross receipts minus proportionate expenses. You do not lose the principal residence exemption on the portion of the home you personally occupy, but the rented portion may be subject to capital gains if you later sell and claimed CCA on it.
For simplicity, most seniors renting a single room do not claim CCA on their principal residence.