If someone else runs the property for you, what you pay them is a rental expense. On Form T776, it goes on line 8871, Management and administration fees.
What belongs here
- Amounts paid to a person or a company to manage your property
- Amounts paid or payable to agents for collecting rents or finding new tenants
Both halves of that second point matter. A leasing fee for placing a tenant belongs here even though it looks like a cost of advertising — what makes it a management fee is that you paid an agent to do the work, not that you paid for an ad.
What does not belong here
A real estate agent's commission when you sell. That's not a cost of running the rental. It's reported as outlays and expenses on Schedule 3, Capital Gains or Losses, when you report the sale of the property.
Condominium fees. They're an expense, but the form has no line of its own for them, so they go on line 9270, other expenses, along with your share of the upkeep and repairs of the common property.
The cost of the ad itself. A newspaper, radio, or television ad for the unit is advertising, line 8521.
What to keep
Keep detailed records of the rental income you earn and the expenses you incur, supported by invoices, receipts, contracts, and other supporting documents. For this line:
- the management agreement, which shows what the fee covers
- the monthly or annual statement from the manager or agent
- the invoice for a leasing or tenant-placement fee
A property manager's statement usually nets the fee against the rent it forwards you. Keep the statement rather than only the bank deposit: the deposit shows one number where the return needs two — the rent you earned and the fee you paid.
Don't send them in with your return — keep them in case the Canada Revenue Agency (CRA) asks to see them. The CRA may not allow an expense you can't support with a document. Generally, keep your records for six years from the end of the tax year they relate to.
Official CRA sources
Source: Canada Revenue Agency (canada.ca). Not tax advice.