Yes, you can claim mortgage interest on a rental property as a tax-deductible expense in Canada. The key rule is that only the interest portion of your mortgage payments is deductible, not the principal repayment. The Canada Revenue Agency (CRA) allows rental property owners to deduct mortgage interest because it is a direct expense used to generate rental income. However, you cannot deduct the principal portion of your payments, closing costs, or loan fees, as these are considered capital expenses. When you own rental property, the CRA treats your mortgage like any other business expense. Your monthly mortgage payment consists of two parts: interest and principal. Only the interest portion reduces your taxable rental income. For example, if your annual mortgage payment is $12,000 and $8,000 goes to interest while $4,000 goes to principal, you can only deduct $8,000 on your tax return. The $4,000 principal payment builds equity in the property but is not tax-deductible. You can find your mortgage interest breakdown on your lender's annual statement, which they typically send in January or February. Your mortgage lender must provide this information, and you should request it if you do not receive it automatically.
No. Only the interest portion of your mortgage payment is tax-deductible. The principal repayment builds equity in the property but is not an expense the CRA allows you to claim.
Your mortgage lender must provide an annual statement showing the interest and principal breakdown of all payments made during the tax year. Request this statement if you do not receive it automatically by early February.
Yes. Mortgage default insurance premiums (such as CMHC insurance) paid to protect the lender are deductible as a rental expense. This is in addition to the deductible mortgage interest.
Interest paid on a loan used to renovate or repair a rental property is deductible. However, the renovation costs themselves are capitalized and claimed through depreciation (CCA) rather than as a direct expense.
No. Each rental property is tracked separately on your tax return, and you claim the mortgage interest for each property on the appropriate T776 form. The deduction rules remain the same regardless of how many properties you own.