BC Rental Income 101: What Property Owners Need to Know About Taxes
If you're earning rental income in British Columbia, congratulations — real estate remains one of Canada’s most popular and tax-friendly wealth-building tools. But when tax time rolls around, rental income can bring surprises if you're not prepared.
Whether you're renting out a basement suite, short-term Airbnb, or holding a portfolio of investment units, here’s what you need to know to stay compliant and optimize your tax outcome.
What Counts as Rental Income?
Rental income includes amounts earned from leasing or renting real property — such as homes, apartments, condos, or vacation properties. In BC, this can include:
Monthly rent from long-term tenants
Short-term income via platforms like Airbnb or VRBO
Reimbursements from tenants for utilities or parking
Rental from secondary suites or laneway homes
Reporting Rental Income: Personal or Corporate?
Rental income must be reported annually, typically on Form T776 if you're an individual. However, if the property is held in a corporation, rental income is declared on the corporate tax return — and might be considered passive income, which comes with different tax treatment.
Deductible Expenses to Reduce Taxable Income
You can deduct eligible expenses from your rental income to reduce the tax you owe. Some of the most common include:
Mortgage interest: Principal portion is not deductible
Property taxes: Rental portion
Repairs & maintenance: Must be reasonable and not capital improvements
Utilities (if paid by you): Only if not reimbursed by tenants
Insurance: Applies to rental property coverage
Advertising: Cost to market the unit
Management fees: Paid to property managers, strata or agents
For multi-use properties (e.g., part personal residence, part rental), expenses must be prorated.
Capital Improvements vs. Repairs
Be careful — some upgrades may be considered capital improvements rather than repairs. Capital expenses (e.g., a new roof or furnace) are not immediately deductible but must be depreciated over time using Capital Cost Allowance (CCA).
GST/HST on Rental Income
Long-term residential rental: Generally exempt from GST/HST
Short-term rentals (under one month): Subject to GST/HST in some cases
If your annual rental revenue exceeds $30,000, you may be required to register for GST/HST
Speculation & Vacancy Tax (SVT) and BC Property Tax Surcharges
BC has several provincial programs that may affect rental property owners:
Speculation and Vacancy Tax: Applies to some vacant or underused properties — exemptions available for rented homes
BC Property Transfer Tax & School Tax Surcharges: Luxury or higher-value properties may trigger additional taxes
Tax Tip for Couples
If jointly owned, rental income can be split based on ownership percentage, not who receives the rent. Strategic allocation can help minimize total household tax liability.
Final Thoughts
Rental income can be a powerful source of cash flow — but only when managed properly. Tracking expenses, knowing when GST/HST applies, and understanding what qualifies as a deductible can keep you onside with CRA and ensure you’re not paying more tax than necessary.
Need help setting up your rental records or filing Form T776 correctly? I help BC landlords organize their books, maximize deductions, and stay CRA-compliant.