Track Rental Expenses All Year, Not Just at Tax Time

Scrambling through receipts in March is stressful and easy to get wrong. Recording expenses as they happen takes a few seconds each and pays off when it is time to file.

Repairs versus improvements

In Canada, the CRA separates rental costs into two kinds, and they are treated very differently:

• Current expenses are ongoing costs with a short-term benefit, such as routine repairs, repainting, insurance, property tax, utilities you pay, advertising, and condo or strata fees. These are generally deducted in the year you pay them.
• Capital expenses are lasting improvements or purchases, such as a new roof, a new furnace or major renovations. These are not deducted all at once. They are usually claimed gradually through capital cost allowance.

Fixing a leaky faucet is a current expense. Replacing the whole kitchen is capital.

Things that are easy to get wrong

• On a mortgage, the interest is deductible but the principal payments are not.
• Land transfer tax paid when you buy is a capital cost, not a current expense.
• Fines and penalties are not deductible.
• If you use part of a property personally, only the rental share of shared costs can be claimed.

Make a habit of recording as you go

Good records usually need only a few things for each expense: the date, the amount, who you paid, what it was for, and the receipt. Use the same category names every time so your totals add up cleanly at year end.

Keystead helps keep it tidy

In Keystead, expenses sit alongside your properties and use a shared payee list tied to categories. A plumber you pay several times becomes one payee with a consistent category, and your year-end numbers are easier to read.

This post is general information and not tax advice. Check the CRA's rental income guidance or speak to an accountant about your situation.