RENTAL INCOME - EXPENDITURE RELATING TO MOTOR
VEHICLES
You can deduct motor vehicle expenses under certain special
circumstances. For more information, please visit the following
links:
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4036.html
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/completing-form-t776-statement-real-estate-rentals/rental-expenses-you-deduct/motor-vehicle-expenses.html
You can enter motor vehicle expenses under "Rental
income".
We suggest that you enter the motor vehicle expenses in the
rental property that has net income before expenses for the
vehicle.
To deduct the expenses of your vehicle, follow the procedure
below.
1. On the "Left side menu of the Interview tab", select
the "Rental income" item.
2. Under this heading, choose the sub-section "Motor vehicle
expenses".
3. On the "Motor Vehicle Expenses" page, choose the
option that is right for you. You will note the rules
regarding the circumstances that allow you to deduct vehicle
expenses are stated on this page.
4. Enter the information pertaining to the vehicle and choose
the appropriate option from the drop-down menu for the line
"Level at which the expense is claimed", choose the
"Business expenses" option. However, note that you could
choose another option.
5. If you have opted for a purchased vehicle and it is the same
vehicle as the previous year, on the line "Opening balance of
the undepreciated capital cost" enter the UCC which you will
find in Area A of Form T2125 in column 10 of your tax return of the
previous year.
However, if this is the first year of use of this vehicle for
business purposes, do not enter an amount on this line. Go to the
line " Description and amount of capital additions (other than
AIIP:"(or "Description and amount of capital additions
AIIP") instead and enter the fair market value (FMV) of
the vehicle.
6. For a purchased vehicle, on the line "CCA class of the
vehicle" select the class of your purchased vehicle from the
drop-down menu. The CRA considers that a vehicle with a cost
that is less than $ 30,000 before taxes
is Class 10 and other vehicles are
considered Class 10.1, a Class 54 vehicle is a Zero
Emission vehicle whose cost must not exceed $55,000 before
taxes.
Please refer to the following link to determine the rules and
vehicle category:
For the CRA:
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses/motor-vehicle-expenses/type-vehicle.html
7. To determine the part of the expenses applicable to your
business, enter the "Kilometres travelled for business or
work" and the "Total kilometres travelled".
8. Then, enter the motor vehicle expenses you have incurred.
9. If you have a leased vehicle, it is important that you
complete the leasing cost section appropriately.
NOTE: We suggest that you keep all your documents, as
well as a record of the kilometers you drove for your rental
properties and the total kilometers driven in the year.
The calculation of eligible motor vehicle expenses will be
detailed on page 4 of form T776 for the federal
government and TP-128 for Quebec.
ID: 20220228093758DEX.xml
Webpage: KPA320-20220228093758DE.htm
