Tax · Rental property
Basement apartment rental income tax.
Renting part of the home you live in? You report the rent, but you can deduct the share of the house costs that relate to the rented area.
Deduct only the rented share of house-wide costs, such as mortgage interest, property tax, insurance and utilities, plus costs that exist only for the tenant. CRA example: rent 25% of the building and your personal part is the other 75%. Do not claim CCA without reading the principal-residence warning below.
Inputs
Result
Enter the floor areas, rent and costs, then press Calculate.
How renting part of your home is taxed
You report rent as income and deduct the expenses that relate to the rented area. CRA’s guide says: “if you use 25% of the building you live in for your rental operations, your personal part is the remaining 75%.” This calculator uses floor area as the reasonable basis for sharing house-wide costs; if a different method fits your home better, use it and keep the working. Costs that only exist for the tenant are deducted in full.
You cannot claim the expenses of renting part of your property “if you have no reasonable expectation of making a profit.” Mortgage principal is never an expense; only the interest portion is.
The principal residence warning
When part of your home produces income, CRA says you may need to split the selling price and the adjusted cost base between the income and personal parts, and only the gain on the income-producing part is reported. CRA’s exception for minor income use requires that no structural changes were made and that “no capital cost allowance (CCA) is claimed on the property.” That is why this tool leaves CCA out. Speak to a tax professional before claiming CCA on a basement suite.
Source, retrieved October 2026: CRA guide T4036, Rental Income; federal brackets from CRA 2026 tax rates and income brackets.
Frequently asked questions
Do I pay tax on rent from my basement apartment?
Yes. The net rent (rent minus the share of expenses that relate to the rented area) is taxable income, reported on Form T776.
Which home expenses can I deduct?
The rented share of mortgage interest, property taxes, home insurance, utilities and maintenance, plus costs that are only for the rental. Mortgage principal is not deductible.
Should I claim CCA on my basement suite?
Be careful. CRA ties the principal residence exception for minor income use to claiming no CCA on the property. Get advice first.
Is the split always by square footage?
CRA asks for a reasonable basis. Floor area is the method this calculator uses; whichever method you choose, keep your working.
Estimate only
Estimate only. No CCA is modelled, one flat provincial rate you enter is applied, and credits, surtaxes and municipal licensing or secondary-suite rules are not considered. Confirm with CRA guide T4036 or a tax professional.