Definition
Form T776 (Statement of Real Estate Rentals) is the Canadian tax document for declaring income and expenses related to property rentals.
**T776 structure**: - Gross rental income (rents received) - Less: deductible expenses (mortgage interest, property taxes, insurance, maintenance, management fees, advertising, accounting fees) - Less: Capital Cost Allowance (CCA — optional, can create artificial loss) - = Net rental income (or net loss)
**Impact on mortgage qualification**: - Most lenders add 50-80% of gross rental income to qualifying income (CMHC methodology = 'offset rental income') - Some lenders use T776 net income (more conservative) - CCA is generally excluded from analysis (added back as non-cash)
**Tip**: An investor should not claim CCA if the goal is to maximize mortgage qualification — CCA reduces declared net income without real short-term benefit (it creates a deferred tax liability on property disposition).