# Tax on Rental Income for Canadian Landlords

> Rental profit is added on top of your other income. Enter rent and costs to see the extra income tax and what you keep in your province

Collect $30,000 in rent, pay $14,000 in costs, and you're left with $16,000 of net rental income. For an Ontario landlord with $80,000 of other income, this calculator puts the extra tax at $4,744, or 29.7% of that net.

## What part of the rent gets taxed?

Net rent: the rent you collected minus the costs of earning it. The tool asks for both, and it's the net that gets taxed, not the rent you see landing in your account each month. Costs include mortgage interest, property tax, insurance, repairs and management fees. The net figure lands on top of your other earnings and is charged at ordinary rates, so a landlord in a high bracket keeps less of every rental dollar. That's the whole idea.

## How does the same rent change with your income?

| Case, $30,000 of rent | Net rent | Extra tax | Share of net | Left after tax |
| --- | --- | --- | --- | --- |
| Ontario, $80,000 other income, $14,000 costs | $16,000 | $4,744 | 29.7% | $11,256 |
| Ontario, $40,000 other income, $14,000 costs | $16,000 | $3,270 | 20.4% | $12,731 |
| Alberta, $80,000 other income, $14,000 costs | $16,000 | $4,880 | 30.5% | $11,120 |
| Ontario, $80,000 other income, $20,000 costs | $10,000 | $2,965 | 29.7% | $7,035 |

## What do those rows tell you?

Compare the first two. Same rent, same costs, yet the landlord earning $40,000 elsewhere pays $1,474 less, because part of the rental income falls in a lower tax step and the rest of it doesn't reach the higher one. The Alberta row shows the province matters as well: $4,880 against $4,744.

The last row raises costs so the net drops to $10,000. Tax falls to $2,965, yet the rate stays at 29.7%, since all of it still sits in the same step. In that situation every dollar of a valid expense saves about 30 cents.

Rent going up follows the same pattern. Lift rent collected from $30,000 to $33,000 and net rent becomes $19,000, the tax $5,645, and you keep $13,355. About 70 cents of each extra rent dollar stays with you.

It also helps to think monthly. In the first row, $4,744 of tax is about $395 a month, and the $11,256 left is about $938 a month. Set the tax money aside as each rent payment arrives and filing time won't sting.

Big rental profits can mean paying tax during the year, which surprises people. The CRA says you have to pay by instalments for 2026 if your net tax owing is more than $3,000 ($1,800 in Quebec) and it was above that amount in 2025 or 2024 too, as set out on its [who has to pay instalments](https://www.canada.ca/en/revenue-agency/services/payments/payments-cra/individual-payments/income-tax-instalments/who-pays-instalments.html) page. The [tax instalments calculator](https://tax-services.ca/calculators/income-tax/tax-installments) tells you whether quarterly payments apply to you.

## Where does rental income go on my return?

You fill in Form T776, the statement of real estate rentals, listing the gross rent, each expense and any capital cost allowance. The net figure from line 9946 of that form is what you enter on line 12600 of your return, as the CRA's page on [completing Form T776](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals.html) explains.

Think of Leila in Hamilton, who rents a duplex unit. She sees $2,500 hit her account each month, yet the return asks for the full $30,000 collected and the full list of costs, not the leftover cash. Starting a simple spreadsheet in January is the easiest habit she can build, and tax time gets a lot calmer.

## What does the calculator leave out?

- Capital cost allowance is optional. Enter the building cost (not the land) and the tool takes 4% of it, which is the Class 1 rate. It never goes above your net rent, because the claim can't create or increase a rental loss. The first year and other classes can differ.

- A rental loss is set against your other income, so the result shows the tax it saves. The rules can limit losses in some cases, such as when the property isn't rented to make a profit.

- Selling the property can trigger a capital gain, which is a separate calculation.

- Your other taxable income is treated as ordinary income for the estimate.

Keep a receipt for every expense you enter. The rent total should match your bank deposits, too.

## Which calculator should you use next?

Thinking of selling? It's a separate bill. The [capital gains tax calculator](https://tax-services.ca/calculators/income-tax/capital-gains-tax) estimates that bill. To see what one more dollar of rent costs you, try the [marginal tax rate calculator](https://tax-services.ca/calculators/income-tax/marginal-tax-rate). Buyers sizing up a property can compare returns in the [rental property calculator](https://tax-services.ca/calculators/real-estate/rental-property), and the [income tax calculator](https://tax-services.ca/calculators/income-tax/income-tax-calculator) shows the whole yearly picture.

## How we checked the figures

The tax steps and credits are 2026 federal and provincial figures from Canada.ca and provincial pages, last checked on 29 September 2026. This is an independent guide, separate from any government body.

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Source: https://tax-services.ca/calculators/income-tax/rental-income-tax
Last updated: 2026-10-06
Independent information site. Not affiliated with the CRA. No services, no guarantee of accuracy. See https://tax-services.ca/disclaimer