Form T776, Statement of Real Estate Rentals, is the official Canada Revenue Agency (CRA) form used by Canadian taxpayers to report rental income and expenses from real property. It is the Canadian equivalent of the U.S. Schedule E (Form 1040) and serves as the primary vehicle for calculating net rental income or loss for inclusion on the T1 General Income Tax Return at line 12600. The form is governed by sections 9, 18, and 20 of the Income Tax Act (R.S.C., 1985, c. 1, 5th Supp.) and the Income Tax Regulations (C.R.C., c. 945).

The T776 requires taxpayers to report all gross rental income received during the fiscal year, itemize all eligible rental expenses, and optionally claim Capital Cost Allowance (CCA) — the tax depreciation mechanism for depreciable property. The form applies to all types of rental real estate including residential houses, apartments, condominiums, commercial properties, vacation rentals, and mixed-use properties. If a taxpayer owns multiple rental properties, they may report them on a single T776 or separate forms, but all properties are generally pooled for CCA purposes.

Under section 9 of the Income Tax Act, net rental income constitutes income from property and is taxable at the taxpayer's marginal rate. Unlike active business income, rental income is generally considered passive income and does not qualify for the small business deduction. However, a rental loss (where deductible expenses exceed rental income) may be deducted against other income such as employment income, effectively reducing the taxpayer's overall tax liability. This loss deductibility makes accurate expense tracking and T776 reporting critically important for landlords and real estate investors.

Form T776 must be filed by any Canadian taxpayer who receives rental income from real property during the tax year. This includes individual landlords who rent out a single residential unit, investors with multiple rental properties, co-owners of rental real estate (each co-owner files their own T776 for their share), and individuals who rent part of their principal residence (such as a basement suite or spare room). The form is attached to the T1 General Income Tax Return and is due by April 30 of the following year (or June 15 for self-employed individuals, though any tax owing is still due by April 30).

The T776 is needed in the first year a property generates rental income and every subsequent year the property remains rented or available for rent. Even if the property was vacant for part of the year, expenses related to the rental activity may still be deductible if the taxpayer was actively trying to rent the property. However, if the property was never available for rent during the year, expenses cannot be claimed. For newly acquired properties, the T776 is filed for the first time in the year rent is first received or the property is first made available for rent.

Co-owned properties require special attention. Each co-owner must file their own T776 reporting their proportionate share of income and expenses based on their ownership percentage. For spouses who jointly own rental property, the CRA requires that rental income be allocated based on actual ownership shares rather than arbitrarily split to minimize taxes. If a property transitions from personal use to rental use (or vice versa), the T776 is needed to report the rental portion of the year and to establish the fair market value at the date of conversion for CCA purposes.

The T776 begins with identification information: the taxpayer's full legal name, Social Insurance Number (SIN), mailing address, and fiscal year end (December 31 for individuals). The rental property section requires the property's complete address, the number of units rented, the taxpayer's ownership percentage, the year the property was acquired, and whether any portion was used for personal purposes during the year.

Part 1 covers gross rental income, including rent payments received from all tenants plus other rental income such as parking fees, laundry revenue, key deposits forfeited, and insurance reimbursements. Part 2 is the expense section, which is the most detailed part of the form. Deductible expenses under sections 18 and 20 of the Income Tax Act include: advertising costs for finding tenants; property insurance premiums; mortgage interest and bank charges (principal repayments are not deductible); office supplies and postage; legal, accounting, and professional fees; property management and administration fees; repairs and maintenance that restore the property to its original condition (capital improvements that enhance the property must be capitalized for CCA); property taxes assessed by the municipality; travel expenses to collect rent or manage the property; utilities paid by the landlord; motor vehicle expenses for property management trips; and other miscellaneous expenses.

Part 3 covers Capital Cost Allowance, the tax depreciation claimed on depreciable assets. Rental buildings are typically classified under CCA Class 1 at a 4% declining-balance rate, or Class 1 at 10% for new residential rental buildings acquired after March 18, 2007. Furniture and equipment in furnished rentals are typically Class 8 at 20%. A critical rule is that CCA cannot be used to create or increase a rental loss — if rental income before CCA is zero or negative, no CCA can be claimed that year. Part 4 calculates the net rental income or loss by subtracting total expenses and CCA from gross rental income. This net amount is reported on line 12600 of the T1 General return. A co-ownership section captures the details of any co-owners including their names, SINs, and ownership percentages.