Rent, a major part of people’s expenses living in Canada, has increased recently. Be it a room, an apartment, a condo, or a whole house; rent prices are very high in Canada. However, the real question is whether you can claim rent on taxes as a deduction or credit.
The answer depends upon the tax situation and province of residence of an individual.
This article defines in detail the process in different states of Canada.
There are two options to claim rent in a tax return in Canada.
The first is considering the benefits that are offered in some provinces that are related to the rent payment. There are only three provinces that provide such benefits and tax credits that you can claim. These provinces include Ontario, Manitoba, and Quebec.
The second is the criteria offered to self-employed individuals that can determine their eligibility for claiming rent on taxes. Therefore, you can claim rent on the tax if you fulfill the criteria; otherwise, you would not be able to claim rent on the tax return.
To claim rent on income tax, you must prepare certain documents for submission, which are as follows:
If a tenant has leased properties at various locations in the tax year, the above information will be required for each address. Nonetheless, rent receipts are not a requirement in every tax program. It is better to have all the documentation done in case of reassessment or audit by the CRA (Canada Revenue Agency).
If you live in Ontario, you can avail of the tax credit through Ontario Energy and Property Tax Credit (OEPTC), a part of the Ontario Trillium Benefit (OTB).
The tax credit is calculated based on the adjusted net family income. It is reduced if the salary exceeds a certain amount. You may either qualify for the property tax, energy, or both.
However, the rent paid throughout the year is one factor that assists in calculating the benefit.
Certain rules apply on claiming such benefits:
You must be living in Ontario at the beginning of the payment month to qualify for this benefit and must have at least one of the following:
In the previous year, you:
The amount of benefit depends on various aspects, including the rent payment, age, income, etc.
For residents of Manitoba, the Education Property Tax Credit program exists. The credit is to assist with school taxes and a portion of rent. The tax amount is just a factor for calculation, just like in Ontario. Nonetheless, there are certain rules like:
You could claim 20% if the rent is paid up to a maximum of $525.
Quebec has a Solidarity Tax Credit program for low- and middle-income families. It entails three components of housing, QST, and whether the individuals are living in northern villages or not. To be eligible, you must be at least 18 years old and a Canadian citizen. The amount of the credit depends on income, expenses, and location.
For self-employed individuals, part of the rent is eligible for a tax credit if the space in the home is used as an office or for business purposes. The deduction is based on the size of the space used.
Rent on a tax return cannot be claimed if you are a student unless you live in Ontario, Manitoba, or Quebec, with rent expenses already discussed in the program.