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Home -> Real Estate -> Is Rental Income Property Income or Business Income?Rental Income - Property Income or Business Income for Tax Purposes?When is Rental Income Considered Business Income? Tax Treatment Differences - Business vs Property Income Business Rental Income Tax Treatment Property Rental Income Tax Treatment Rental Income Received by a Partnership Rental Income Received by a Corporation Canada Revenue Agency (CRA) Resources When is Rental Income Considered Business Income?In general, the number and kinds of service provided in relation to the rental of the property will determine whether the income is property or business income. The more services that are provided, the more likely that the income will be considered business income. The number of rental properties being managed will not affect the classification of the income. For more detailed information, see the Canada Revenue Agency (CRA) article Rental income or business income? The federal government has proposed to disallow any tax deductions for short-term rentals that fit certain circumstances. See Proposal to Crack Down on Non-Compliant Short-Term Rentals. Tax Treatment Differences - Business vs Property IncomeProperty income and business income are treated differently for tax purposes. The following are some of the differences in taxation of individuals. Business Rental Income Tax Treatment
Property Rental Income Tax Treatment
To input rental income in the Canadian Tax and RRSP Savings Calculator, include rental income from business as self-employment income, and rental income from property as "other income". Rental Income Received by a PartnershipThe tax treatment for each type of rental income is the same for an individual or a partnership. If you're not sure if you have a partnership, see Income Tax Folio S4-F16-C1, What is a Partnership? New: For a partnership carrying on a rental business, it is likely that an Underused Housing Tax return was required to be filed for 2022, with the first return due date deferred to April 30, 2024. Depending on the partners, it is possible that the UHT return may not have to be filed for 2023 and later years. Rental Income Received by a CorporationWhen rental income is received by a corporation, the income is usually considered investment (property) income, and is not considered active business for purposes of the small business deduction. A corporation whose principal purpose is to derive income from property is usually considered a specified investment business, and is not eligible for the small business deduction. Tax Tip: If you plan to pursue property rental, know the tax rules, and get professional advice! TaxTips.ca ResourcesReal Estate Rentals - all topics Personal Income Tax Return Due Date Canada Revenue Agency (CRA) ResourcesRental income or business income?IT-434R Rental of Real Property by Individual (Archived) IT-434RSR Rental of Real Property by Individual (Archived) Form T776 Statement of Real Estate Rentals T4002 Business and Professional Income Guide, with links to the forms required to be filed with the personal income tax return. IT-364 Commencement of Business Operations Filing Due Dates - see Important dates for Individuals
Revised: March 16, 2025
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