Enter your rents, expenses and other income to see how much income tax a year of rental income adds, or how much a rental loss saves. The tax comes from the same federal and provincial model as WealthNorth’s income tax calculator, including the basic personal amounts, the Ontario surtax and Health Premium. It is part of the real estate tax guides; the rules behind each input are in the landlord tax guide.
Tax year 2026. Federal and provincial or territorial income tax only (the rental is added with no CPP or EI contributions). Other income is taxed with basic credits only: the pension income amount, the age amount and the OAS recovery tax aren't included.
How the calculator works
- Net rental income before CCA is gross rents minus deductible expenses (line 9369 of Form T776).
- Capital cost allowance is taken off next, but only down to zero: Capital cost allowance (CCA) is optional and is worked out after combining the net income or loss of all your rental properties: it can bring that net rental income down to zero, but it can't create or increase a rental loss.
- The tax is your income tax with the net rental income added to your other income, minus your income tax without it.
- A loss is deducted from your other income, which lowers your tax. That assumes the loss is deductible: A rental loss can be deducted from your other income only if you incurred the expenses to earn income: you can't claim one when you rent to someone you know for less than you'd charge a stranger, when a family member or housemate only shares costs, or when renting part of your home has no reasonable expectation of profit.
Example: extra tax on $10,000 of rental income in Ontario
The extra Ontario and federal income tax on $10,000 of net rental income at 2026 rates, for someone under 65 whose other income is non-employment income such as interest, at three income levels:
| Other income | Tax without the rental | Tax with the rental | Extra tax on the $10,000 |
|---|---|---|---|
| $40,000 | $5,111 | $7,166 | $2,055 |
| $80,000 | $15,497 | $18,462 | $2,965 |
| $150,000 | $41,626 | $46,123 | $4,497 |
“Tax” here is federal plus Ontario income tax, including the Ontario surtax and Health Premium, with basic credits only: the pension income amount, the age amount and the OAS recovery tax aren’t modelled, so the figures don’t fit someone whose other income is a pension or who is 65 or older. The calculator above runs the same comparison for any province and for employment income.
Expenses the calculator expects
The expenses box is for deductible operating expenses: advertising, insurance, mortgage interest, professional and management fees, repairs and maintenance, property taxes, utilities you pay and similar costs. Two rules decide what goes in it:
- A rental expense that only restores the property to its original condition is usually a current expense, deducted in the year you pay it; one that improves the property beyond its original condition, extends its life, gives a lasting benefit or replaces a separate asset is usually a capital expense, added to a CCA class instead.
- When you rent out part of the home you live in, you deduct the expenses that relate only to the rented area in full and a share of the expenses for the whole property, split by square metres or by the number of rooms you rent.
Mortgage principal, the value of your own labour and the cost of land aren’t deductible. Each expense and its conditions are covered in rental property expenses you can deduct.
Capital cost allowance
Most rental buildings bought after 1987 are Class 1, depreciated at 4% a year on a declining balance, and furniture and appliances are Class 8 at 20%; land isn't depreciable. In the year you buy, the half-year rule generally limits the claim to half of your net additions to a class, but it doesn't apply to property that qualifies for the accelerated investment incentive (acquired after November 20, 2018 and before 2025) or the reaccelerated incentive (acquired after 2024), as a rental building bought from a seller you deal with at arm's length usually does. Claiming it lowers this year’s tax and the building’s undepreciated capital cost (UCC). When you sell: If the proceeds from the property you sell are more than the undepreciated capital cost (UCC) of its class, the difference is recaptured CCA, added to your income in full rather than at the capital gains inclusion rate. The calculation and the trade-offs are in CCA on rental property; the tax on a sale is in capital gains on rental property.
Reporting the result
The rents, expenses and CCA go on Form T776, Statement of Real Estate Rentals, and the net income or loss on line 12600 of your return. The steps are in how to report rental income.
Related calculators and guides
Sources
The figures and rules on this page come from these sources, last checked against them between September 24, 2026 and October 1, 2026. How we check facts.
- Canada Revenue Agency: Rental Income
- Canada Revenue Agency: Payroll Deductions Formulas - 123rd Edition Effective July 1, 2026
- Canada Revenue Agency: Accelerated investment incentive
- Justice Laws (Canada): Income Tax Regulations
- Justice Laws (Canada): Income Tax Regulations