The tax deductions available for rental properties depend partly on whether you rent a furnished or unfurnished unit, since furnishings are treated differently by the CRA. Both types of rental properties can claim operating expenses like property tax, insurance, and utilities. However, furnished rentals may have additional deductions for furnishing costs and shorter depreciation periods for furniture, while unfurnished properties typically depreciate building improvements over longer timelines. The key difference is how quickly you can recover the cost of furnishings through Capital Cost Allowance (CCA), which affects your annual tax deductions. The CRA distinguishes between these property types based on what's included in the rental unit: Furnished rentals typically include: - Beds, sofas, and dining furniture - Kitchen appliances and cookware - Curtains, rugs, and decorative items - Linens, towels, and bedding - Electronics (TV, stereo, lamps) Unfurnished rentals typically include: - Only permanent fixtures (stove, refrigerator if built-in) - Flooring and paint - Light fixtures attached to walls or ceilings - Structural elements This distinction matters because the CRA classifies furnishings differently from the building itself, which changes depreciation rates and tax deductions. Both property types can claim Capital Cost Allowance (CCA), which is Canada's version of depreciation.
No. Furniture is typically a capital asset that depreciates over time through CCA deductions, not an immediate expense. Minor repairs to existing furniture may be deductible as repairs, but purchasing new furniture goes into your CCA Class 8 pool and depreciates at 20% per year.
Repairs (fixing a broken leg on a chair, re-stuffing a cushion) are fully deductible in the year you pay for them. Capital purchases (buying a new sofa or bed) are added to your CCA pool and depreciated over multiple years. The CRA considers the cost, whether the item is replaced or repaired, and your overall pattern of spending.
No. You add the total cost of all furniture and furnishings to your CCA Class 8 pool each year. The CRA does not require you to itemize individual pieces, but you should keep receipts in case of audit and separate furnishing costs from building renovation costs.
Yes. Furniture purchased during any year is added to your CCA Class 8 pool for that tax year, regardless of when you purchase it. Report the total furnishing costs in the year of purchase on your Form T776.
Yes. Insurance premiums for rental properties are fully deductible as operating expenses. Furnished rentals often have higher premiums due to the additional contents, and you can claim the full amount on your tax return.