Property taxes are a regular cost of owning a home. Many Canadians who own their own house or condominium ask whether they can deduct property taxes on their income tax return.
The short answer is generally no for most homeowners when the property is their principal residence.
However, there are specific situations where property taxes can be claimed or help you qualify for provincial credits.
Are Property Taxes Tax Deductible on a Principal Residence
Property taxes you pay on your primary home cannot be deducted as a tax deduction on your federal or provincial personal income tax return for most homeowners in Canada.
The Canada Revenue Agency (CRA) treats these taxes as a personal living expense, not a deductible cost for income tax purposes.
This means you cannot subtract the property taxes you paid from your taxable income in the same way you might for business expenses.
This rule applies to any home you live in, whether it is a house, condo, townhouse, or other personal residence. There is no federal deduction simply for owning a home and paying property taxes.
Can Property Taxes Be Claimed for Rental Properties
Yes. If you own a rental property that generates rental income, the property taxes you pay for that property are usually deductible as an expense against rental income.
When reporting your rental income on Form T776, Statement of Real Estate Rentals, the CRA allows you to include property taxes as a rental expense.
This reduces your net rental income and may lower the amount of tax you owe.
If you rent out part of your home or a secondary building, you may be able to claim a proportionate share of the property taxes based on the portion of the property that is rented out.
Can You Claim Property Taxes for Business Use of Home
Under certain conditions, if you are self‑employed or a commissioned salesperson and you use part of your home for business, you may be able to claim a portion of your property taxes as a business expense.
The deductible amount must be reasonable and based on the space used for business activity. These rules are part of the CRA’s guidelines for home office expenses and business use of part of your residence.
If you qualify, you would report business income and expenses on Form T2125, Statement of Business or Professional Activities and include eligible home office portions of property taxes.
Are Property Taxes Deductible When Calculating Capital Gains
No. When you sell your principal residence or other property, property taxes are not included in calculating your capital gain or loss.
The CRA considers property taxes to be a current expense, not a cost that increases your cost base for capital gains purposes.
Therefore, you cannot use property taxes to reduce the capital gain on the sale of a property.
Can Property Taxes Provide Tax Credits Instead of Deductions
Yes. In some provinces, property taxes can help you qualify for tax credits or rebates, even though they are not directly deductible in most circumstances.
For example, in Ontario you can apply for the Ontario Energy and Property Tax Credit (OEPTC) when you file your tax return. The credit is designed to help low‑ and moderate‑income residents with property taxes and energy costs for their principal residence.
You file for this credit on your annual tax return using Form ON‑BEN as part of your income tax return.
Each province and territory in Canada may also offer its own programs or credits tied to property taxes, seniors, or other criteria.
You can find a summary of provincial credits and grants on the CRA website.
Do You Need Receipts to Claim Property Taxes
While you cannot deduct property taxes for most personal residences, you should keep official property tax bills and receipts if you plan to claim them as part of rental or business expenses.
For provincial credits such as the OEPTC, you may need to provide proof of the property tax paid on your principal residence.
Always keep records in case the CRA asks for supporting documents.
Is There a Homeowners’ Tax Credit for Canadian Homeowners
There are specific credits tied to homeownership that may indirectly help with tax costs, but these are not equivalent to deducting property taxes.
For example, the Home Buyers’ Amount lets first‑time buyers claim a federal credit when they buy a qualifying home. This is claimed on line 31270 of your tax return. It’s a tax credit, not a deduction for property taxes.
Provincial credits and grants also exist, such as credits in Ontario and Manitoba for property tax‑related relief, but eligibility and amounts vary by province.
What Happens if Property Is Used for Mixed Purposes
If a property is used for both personal and income purposes, such as a rented basement or home office, you can generally claim the share of property taxes that relates to the income‑producing portion.
You must calculate a reasonable percentage based on the amount of space used and how long it was used for income‑producing activities.
This prevents claiming the full property tax for your personal residence portion. Typically this is done through rental or business reporting forms.
When Property Taxes Can Be Entered on Your Tax Return
You generally will enter property taxes on your income tax return when you are claiming:
- rental income and expenses on Form T776, including property taxes for the rental period, or
- business use of home expenses on Form T2125, including a portion of property taxes, or
- provincial property tax credits such as the Ontario Trillium Benefit using Form ON‑BEN.
Are Property Taxes Ever Itemized for Canadian Federal Tax
Unlike in some other countries, such as the United States where property taxes can be itemized on Schedule A of Form 1040, Canada does not have an equivalent federal deduction for property taxes on a principal residence.
This means that if your property serves as your home and does not generate income, you generally cannot deduct property taxes to reduce your taxable income.