Reporting rental income in Québec: T776, TP-128 and CCA

Two forms: T776 and TP-128

If you own a plex in your own name, your rent goes on both of your income tax returns:

• Federally, Form T776, Statement of Real Estate Rentals, filed with your T1 return: gross rent on line 12599, net rent on line 12600.
• In Québec, Form TP-128, Income and Expenses Respecting the Rental of Immovable Property, filed with your TP-1 return (line 136). Revenu Québec requires a separate TP-128 (or financial statements) for each building.

Co-owners

Co-owners who are not a partnership each enter, on line 12599 of their T776, the gross rental income of the whole property, without splitting it, then their share of net income before adjustments (line 9369) as "amount 2." Each claims capital cost allowance on their own share and, in Québec, files one TP-128 per building. A partnership has its own returns (T5013, TP-600).

April 30, not June 15

For the 2026 tax year, the return and payment are due Friday, April 30, 2027. June 15, 2027 applies only if you or your spouse carried on a business during the year, and any balance owing is still due April 30.

Renting out apartments usually produces income from property. According to the Canada Revenue Agency (CRA), basic services (heat, light, parking, laundry) don't make it a business; cleaning, security or meals may. Your deadline is therefore usually April 30 (CRA filing dates).

No tax is withheld on rent. If your net tax owing is more than $1,800 for the year and for one of the two previous years, you must pay instalments on March 15, June 15, September 15 and December 15.

Current expense or capital expense

A current expense is deducted in the year. A capital expense is added to the building's cost and deducted gradually through capital cost allowance. For Revenu Québec, the first restores or keeps the property in the condition it was in when you bought it; the second acquires it, adds to it or improves it.

• Current expenses: repairs and maintenance (if you do them yourself, materials only, not your labour); municipal and school taxes; insurance; heating, electricity and water; interest on money borrowed for the building; advertising; accounting fees; landscaping, except sidewalks, paths, parking areas and retaining walls.
• Capital expenses: the purchase price and purchase costs, including the property transfer duties (welcome tax); repairs needed to rent out an old building you just bought; appliances and furniture rented with the unit; an addition, such as a fireplace or a garage.
• Two special cases: mortgage financing fees are deducted in equal parts over 5 years; accessibility work (ramps, adapted bathrooms) is deductible right away, with Form TP-157 kept on file.

CCA: depreciate the building, not the land

Capital cost allowance (CCA) spreads the building's cost over several years. Most buildings acquired after 1987 are in Class 1: 4% a year, calculated on the undepreciated capital cost (UCC). Appliances and furniture rented with the unit are in Class 8 (20%). Details: Revenu Québec's Capital Cost Allowance Guide.

• Land can't be depreciated: split the price using the deed or the land-to-building ratio on the municipal assessment roll.
• One class per building whose building portion cost $50,000 or more: recapture or terminal loss is calculated building by building.
• The half-year rule: in the year you buy, CCA generally applies to only half of the net additions.
• No loss: CCA can't create or increase a rental loss; in Québec, it is limited to net rental income, before CCA, from all your buildings. It's optional: anything from zero up to the maximum.
• On sale: if the lesser of the cost and the selling price exceeds the UCC, the difference (recapture) is added to that year's rental income, on top of any taxable capital gain.

The Accelerated Investment Incentive sets aside the half-year rule and applies the CCA rate to 1.5 times the net additions: first-year CCA triples. Ottawa announced its full reinstatement (Fall Economic Statement 2024, Budget 2025), and Québec's Ministère des Finances describes it as fully reinstated for eligible property acquired after 2024 and available for use before 2030. The CRA's page wasn't up to date in September 2026, so have your accountant confirm eligibility.

Form TP-1086.R.23.12: for every landlord

Form TP-1086.R.23.12, Costs Incurred for Work on an Immovable, isn't just for construction. Any person or partnership that pays for renovation, improvement, maintenance or repair work on a building or land in Québec used to earn income must attach it to their return (TP-1, or CO-17 for a corporation); guide IN-100 says so explicitly for rental buildings.

For each person or business, enter the name, address, QST registration number (if none, the business number or social insurance number) and the amount paid or payable, taxes included. Your own employees, yourself, public bodies, and gas, electricity or telecom distributors are left out. Each contractor you omit can cost $200; a contractor who doesn't give you their information faces $500. Ask for the QST number when you pay the invoice.

The federal T5018, by contrast, applies only to businesses earning more than half their income from construction, not to a landlord whose main activity is renting.

Common questions

Do I have until June 15 because I have rental income?

Usually not: renting out apartments produces income from property. Unless you or your spouse carried on a business, the deadline for 2026 is April 30, 2027.

Is the welcome tax deductible?

Not in the year you pay it: transfer duties are added to the building's cost. To estimate them: welcome tax calculator.

Can I deduct replacing all the windows in one year?

Possibly: Revenu Québec lists it among work that restores the original condition. If the work improves the building, it's capital.