Driving for a rental property is deductible only in fairly narrow circumstances. On Form T776 the line is called Motor vehicle expenses (not including capital cost allowance), line 9281, and unlike most expense lines, whether you can claim anything here depends on your situation rather than on what the receipt says.
So read the conditions first. If they don't describe you, the gas receipts aren't rental expenses at all.
If you own one rental property
You can deduct a reasonable amount for motor vehicle expenses if all of these are true:
- you receive income from only one rental property, and it's in the general area where you live
- you personally do part or all of the necessary repairs and maintenance on it
- the driving was to transport tools and materials to the property
That combination is the point: the deduction is for hauling your own tools to a job you're doing yourself, nearby.
You cannot deduct motor vehicle expenses you incur to collect rents. With one property, the CRA considers those personal.
If you own two or more rental properties
You can deduct everything above, plus a reasonable amount for driving to:
- collect rents
- supervise repairs
- manage the properties
This applies whether the properties are inside or outside the area where you live, but they have to be at at least two different sites, away from your principal residence. What counts as reasonable depends on your circumstances.
What isn't on this line
Capital cost allowance on the vehicle. The line's own title says not including capital cost allowance — capital cost allowance (CCA) spreads the cost of the vehicle itself over the years you own it, and it's claimed separately.
Board and lodging on a trip. The CRA treats meals and accommodation as personal expenses. Other costs of getting to the property may belong on line 9200, travel — which has the same conditions as this line.
How the amount is worked out
You don't claim what you spent on the vehicle. You claim the share of it that relates to earning rental income, and that share is worked out from a kilometre log kept for the vehicle. The calculation follows the same method as a business vehicle claim, set out in Guide T4002.
Dossier files the evidence — fuel, insurance, maintenance, and the log. The share itself is arithmetic done on the return.
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 that means:
- the trip log for the vehicle — the date, the destination, the purpose, and the kilometres of each trip. No receipt records these four facts; you write them yourself, and Dossier writes this one with you
- fuel, repair, insurance, and licence receipts for the vehicle
- for the trips themselves, enough to show what they were for — which property, and what you did there
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.