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Taxes

Is Mortgage Interest Tax Deductible in Canada?

Not on the home you live in. The CRA only lets you claim interest on money borrowed to earn income: for a rental property (on Form T776), a business, or investments that can pay interest or dividends (line 22100). A mortgage on your own home isn't used to earn income.

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When interest is deductible

  • Rental property: mortgage interest for the rented property or rented part of your home is a rental expense on Form T776.
  • Investments: interest on money borrowed to earn investment income, like interest and dividends, goes on line 22100. Not if the investment can only produce capital gains, and never for money borrowed to contribute to an RRSP or TFSA.
  • Employees working from home: mortgage interest is not one of the home office expenses employees can claim.

Related

How Rental Income Is Taxed in Canada (Form T776) Report rental income on Form T776 and deduct reasonable expenses you paid to earn it, such as property taxes, insurance, interest and utilities for the rented space. Repairs that restore the property are deducted in the year; improvements are claimed over several years through capital cost allowance. Home Office Expenses for Employees: Form T2200 and How to Claim Employees can claim home office expenses if they were required to work from home more than 50% of the time for at least 4 weeks in a row (or used the space only for work and to meet clients). Your employer signs Form T2200; you complete Form T777 and claim on line 22900. Only the detailed method is allowed from 2023 on.

Sources

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