Yes, you can deduct property taxes and most insurance premiums on rental property in Canada, as long as the property generates rental income. Property tax is a direct operating expense that reduces your taxable rental income, and landlord insurance is similarly deductible. However, not all insurance policies qualify, and there are specific CRA rules about what counts as a deductible expense. Understanding which costs the CRA allows will help you maximize your deductions and reduce the tax you owe on rental income. Property taxes paid to your municipality or provincial government on a rental property are fully deductible. This includes: - Annual property tax bills - Local improvement charges (if they fund repairs to roads, sewers, or water lines) - School taxes (in some provinces where assessed separately) - Property assessment fees or reassessment costs You claim these on your rental income tax form (Form T776 in Canada) in the year you pay them. The CRA views property tax as a necessary operating cost of maintaining rental property, so it reduces your net rental income dollar-for-dollar.
Yes, but only the portion of property taxes allocated to the rental space. If you rent out one bedroom in a three-bedroom home, you can deduct approximately one-third of your annual property tax (adjusted for common areas like hallways). The CRA expects a reasonable allocation method.
Yes, landlord insurance is specifically designed for rental properties and covers liability, building damage, and loss of rent. It is fully deductible because it is a business expense for your rental operation. Standard homeowners insurance is not deductible and won't adequately cover rental liability.
Yes, absolutely. The CRA recognizes property taxes and insurance as deductible in the year they are actually paid, even if your lender pays them on your behalf from an escrow account. Your mortgage statement will show the dates and amounts paid.
You can only deduct the expense in the tax year it is actually due or paid, not when you prepay it. If you pay 2026 property taxes in December 2025, the deduction goes on your 2025 return, not 2026.
Only if the property is being rented out to a tenant, not if you live in it yourself. Insurance on your principal residence is not deductible. If you rent out only part of your home, only the portion of insurance attributable to the rental space may be deductible.