Landlord bookkeeping: per-property books that make the T776 easy

One property, one profit centre — never a blended pot

The T776 reports income and expenses by property, with each co-owner's percentage, and CRA reviews of rental claims usually start by asking for exactly that breakdown. So we build the ledger the same way from day one: in QuickBooks Online, every address is its own class, every transaction carries its property tag through Dext, and a one-page statement per door falls out of the file at year end.

Blended books fail quietly. A portfolio-level profit can hide the one property that is bleeding cash, and it makes a future sale expensive to reconstruct — capital additions, CCA claimed, and selling costs all have to be found address by address when the disposition is reported. Per-property books also settle the everyday questions fast: which unit's furnace died twice, which building carries the insurance increase, which door actually earns its mortgage.

Capex or repair: we sort every invoice the week it lands

The distinction decides whether a cost is deducted this year or capitalized and claimed slowly through CCA — and it is far easier to call while the contractor's scope is fresh than in April. As a working rule, restoring the property to its original condition points to a current repair; improving it beyond what it was points to capital.

Capital items land in the right CCA class for the right address — and each rental building acquired for $50,000 or more sits in its own Class 1 pool, so the CCA schedule must be built per property, not per portfolio. One rental-specific rule shapes everything: CCA cannot create or increase a rental loss, so your accountant needs clean pre-CCA numbers to decide how much to claim each year.

A mortgage payment is three entries, not one

Only the interest portion is deductible on the T776. The blended payment leaving your account splits into interest (expense), principal (a reduction of the loan), and, where the lender collects it, property tax. We post the split monthly from the amortization schedule and true it up against the lender's annual statement, so the interest claim matches paper CRA can see.

Purchase and financing costs follow the same discipline. Land transfer tax and purchase legals go to the property's capital cost, not expenses; refinancing costs are generally deducted over five years. Parking these correctly now is what makes the eventual sale — adjusted cost base, recapture, capital gain — a lookup instead of a forensic project.

Deposits are someone else's money until they are not

In Ontario, a last month's rent deposit is a liability the day it arrives — it becomes income only when applied to the tenant's final month. We hold LMR deposits in a dedicated liability account by tenant and accrue the annual interest the Residential Tenancies Act requires you to pay on them at the guideline rate. Damage deposits, which Ontario landlords cannot lawfully collect, are something we flag, not book.

HST, non-resident owners, and where the books flow at tax time

Long-term residential rent is exempt from GST/HST: you charge no tax on rent and claim no input tax credits, so expenses sit in the books at their full HST-inclusive cost — the opposite habit from any other business you run. If a unit drifts into short-term furnished rental, the regime changes, and the books should show the shift before the tax treatment has to.

If you own Canadian rentals while living outside Canada — or are heading that way — the bookkeeping stays identical but the filings change entirely: 25% non-resident withholding, NR4 slips, NR6 elections, and section 216 returns, all covered in our cross-border tax guide for landlords. Either way, the monthly engine underneath is the fixed-fee close described on our bookkeeping services page: bank feeds reconciled, receipts captured, and a per-property statement you can actually read.

Source: CRA — Current expenses or capital expenses.