Renting Out a Home in China: How to Report the Rent in Canada
Reporting foreign rental income, deductible expenses, currency conversion, the foreign tax credit
Scott Tang, CPAUpdated 2026-11-052026 rules5 min read
After you immigrate, if you rent out your home back in China and collect rent each month, you report it in Canada as rental income (on Form T776), deduct the expenses directly related to renting it out, and pay tax on the net rent. Individual income tax you paid in China on that rent can, if it qualifies, be credited against your Canadian tax up to a limit.
The form for reporting rental income and expenses; it is also used for a home in China
Rent minus reasonable expenses is included in income
Individual income tax paid in China can generally be claimed as a foreign tax credit
A rented-out property abroad counts toward foreign property reporting
From rent to Canadian tax
- 1
Annual rent
Convert to Canadian dollars (rent received monthly can use the annual average exchange rate)
- 2
Subtract expenses
Building management fees, repairs, agent fees, mortgage interest
- 3
Claim depreciation?
Optional, but it can't create a loss
- 4
Net rent into income
Taxed together with your other income
- 5
Credit China's income tax
T2209 foreign tax credit
Which expenses you can deduct
| Expense | Generally deductible Directly related to renting | Generally not deductible Or handled differently |
|---|---|---|
| Building management fees, repairs and maintenance | ✓ | — |
| Agent fees, property manager fees | ✓ | — |
| Mortgage interest | ✓Interest only | ✕Principal is not deductible |
| Home insurance | ✓ | — |
| Property tax (as an expense) | ✓Deducted as an expense | ◐Not an income tax, so it can't be used for the foreign tax credit |
| Individual income tax paid in China | — | ◐Not an expense; claim it as a foreign tax credit instead |
| Renovations, replacing appliances and other major improvements | — | ◐Capital expenditure, claimed through depreciation (CCA) |
| Travel back to manage the rental property | ✓Mainly to collect rent, supervise repairs or manage the property | ✕Meals and lodging; trips mainly to visit family or for a holiday |
Building management fees, repairs and maintenance
- ✅ Generally deductible
- ✓
- 🚫 Generally not deductible
- —
Agent fees, property manager fees
- ✅ Generally deductible
- ✓
- 🚫 Generally not deductible
- —
Mortgage interest
- ✅ Generally deductible
- ✓Interest only
- 🚫 Generally not deductible
- ✕Principal is not deductible
Home insurance
- ✅ Generally deductible
- ✓
- 🚫 Generally not deductible
- —
Property tax (as an expense)
- ✅ Generally deductible
- ✓Deducted as an expense
- 🚫 Generally not deductible
- ◐Not an income tax, so it can't be used for the foreign tax credit
Individual income tax paid in China
- ✅ Generally deductible
- —
- 🚫 Generally not deductible
- ◐Not an expense; claim it as a foreign tax credit instead
Renovations, replacing appliances and other major improvements
- ✅ Generally deductible
- —
- 🚫 Generally not deductible
- ◐Capital expenditure, claimed through depreciation (CCA)
Travel back to manage the rental property
- ✅ Generally deductible
- ✓Mainly to collect rent, supervise repairs or manage the property
- 🚫 Generally not deductible
- ✕Meals and lodging; trips mainly to visit family or for a holiday
Should you claim depreciation (CCA)? You can claim it or not; the rule is that you can't use CCA to create or increase a rental loss. CCA you have claimed may be "recaptured" and taxed when you sell the property later. See "Rental Property: Which Expenses You Can Deduct, and Whether to Claim Depreciation" in the Investment Tax series.
How to split up the tax paid in China
When an individual rents out a home in China, the usual taxes are individual income tax and property tax (plus value-added tax and its surcharges if the rent, spread by month, exceeds RMB 100,000 a month), and many cities collect them together at a consolidated rate (综合征收率). For Canadian purposes, they need to be split apart:
Individual income tax
Claimed as a foreign tax credit
Credit up to the Canadian tax on this net rent
Rent from property abroad is not subject to the 15% limit
Property tax, VAT, etc.
Not income tax
Whether it can be deducted as an expense depends on its nature
If you can't get a breakdown, ask the tax authority or the agent who paid the tax for you
Points to watch
Family or friends living there for token rent
If the rent is below market and there's no genuine profit motive, you can't claim a loss, and expenses have to be allocated based on the actual rental arrangement.
Keep complete records
Keep leases, records of rent received, expense receipts and China tax payment certificates for at least 6 years.
Rent collected by a relative is still your income
If you are the beneficial owner of the property and a relative just collects the rent for you, the rent is still your income.
From personal use to rental: look at the change in use first
When a home abroad that you used yourself is turned into a rental, it is generally treated as sold and bought back at its fair market value at that time (the subsection 45(2) election may be worth looking at), and the capital gain, CCA and the cost for T1135 all have to be set accordingly. Only for a property you owned before landing and have rented out the whole time is the cost its fair market value on the day you landed.
How Sheng Qian CPA can help
Getting the numbers in order
We help you sort out the rent and expenses in Chinese, and split China's taxes into the part that can be credited and the part that, depending on its nature, can be deducted, added to the cost or not deducted at all.
Credit and T1135 together
Rental income, the foreign tax credit and the T1135 are done in the same tax return.
Calculate before you sell
If you plan to sell, we work out the CCA recapture and the capital gain in advance; for fees, see "What Sheng Qian CPA Can Do for Cross-Border Families: From Tax Returns to Foreign Asset Reporting" in this series.
Sources
Disclaimer
This article is general information only and is not tax advice. Everyone's situation is different; please consult a CPA about your specific arrangements, and consult qualified local advisers about tax matters in China. Service fees are as set out in our written quote.
© 2026 Sheng Qian CPA. All rights reserved. Please contact info@sqcpa.ca for permission to republish.
More in this series
All 20 articles in this series →- Foreign-Currency Income and Assets: How to Convert to Canadian DollarsThe annual average exchange rate and the exchange rate on the day of the transaction, sources the CRA accepts
Updated 2026-11-055 min read
- Selling a Home in China: Is There Canadian Capital Gains Tax?How the cost base is set (when you landed matters), exchange rates, and whether the principal residence exemption can be used
Updated 2026-11-056 min read
- Hong Kong and A-Share Accounts: Reporting Dividends and Capital GainsReporting income from brokerage accounts outside Canada, the cost base and exchange rates
Updated 2026-11-055 min read
- T1135 Foreign Property Reporting: What to Report and How the $100,000 Test WorksWhat has to be reported, how the cost threshold is calculated, assets you don't report, penalties for not filing
Updated 2026-11-056 min read
Want to talk through your company's situation?
Book a consultation