Rent with no HST changes the whole ledger
Any residential tenancy with continuous occupancy of a month or more is an exempt supply. You charge no HST on the rent, and you claim no input tax credits on what the property costs you. The 13% on a furnace repair or a management invoice is not a recoverable tax; it is part of the expense, full stop. Landlord books should reflect that from the start: no HST accounts, expenses recorded at their full tax-included cost, nothing sitting in a receivable waiting for a refund that will never come.
The exception is mixed-use property, common on GTA main streets: a commercial unit at grade with apartments above. There the commercial rent is taxable, the residential rent is exempt, and input tax credits must be apportioned between the two uses on a method you can defend. We set that method once, document it, and apply it consistently every quarter.
| Line in a landlord's books | Tax reality |
|---|---|
| Rent from long-term residential tenants | Exempt: no HST charged, ever |
| Repairs, maintenance, snow and lawn contracts | 13% HST paid, no credit back; the full amount is your cost |
| Property management fees and utilities | 13% HST paid, no credit back |
| Condo fees on a rental condo | Exempt: no HST inside them |
| Property insurance | Ontario charges 8% retail sales tax on premiums, not HST |
| Property taxes and mortgage interest | No HST at all |
One door, one ledger
Portfolio totals hide losing properties. We run per-property books, one class per door in QuickBooks Online with Dext capturing every invoice against the right address, so each property shows its own rent, its own repairs and its own result. A duplex that clears a healthy surplus while the condo quietly bleeds looks fine in aggregate; it is not fine, and blended books will never tell you which door is the problem.
Shared costs get allocated, not dumped: one insurance policy covering three properties splits across three ledgers, and the umbrella line of credit is traced to whichever property its draws actually funded. The rent roll reconciles against the bank monthly, so an e-transfer with a vague reference, a tenant sliding two weeks late or a unit sitting empty between leases is visible the month it happens, not discovered the following April. During a turnover we keep the vacant unit's utilities, advertising and touch-up costs on its own ledger, so the true cost of the empty month is a number, not a feeling.
The repair-or-improvement line
The costliest coding error in landlord books is calling capital work a repair. Fixing a leak, repainting between tenants, replacing cracked tiles: current expenses, deductible in full this year. A new roof, a gutted kitchen, a rebuilt porch: capital improvements that attach to the building's cost and surface later through CCA or a smaller gain on sale. New appliances land in their own capital class again.
We code each invoice correctly when it enters the books and keep the contractor's description of the work on file, because the distinction gets tested twice: once at filing, and again if the CRA reviews the year. Recharacterizing twelve months of "repairs" in March is how deductions get lost and reviews get long.
Deposits, arrears and the paper the LTB expects
Ontario permits a rent deposit for the last month only, and it stays a liability in the books until it is applied to that final month; it is not income on the day it lands. The Residential Tenancies Act also requires interest on that deposit annually at the guideline rate, a small entry nearly every self-managed spreadsheet misses.
Arrears need a per-tenant ledger, not a memory. If a tenancy ever reaches an N4 notice or a Landlord and Tenant Board hearing, the record that holds up is the one kept as it happened: charges, receipts and running balances by date. Our monthly close produces that ledger as a by-product, so the evidence exists before you need it.
From clean books to a clean filing
Everything above flows straight into the filing: personally held properties feed the T776 schedule for each co-owner's share, and a corporate portfolio feeds T2-ready statements. We deliver the whole stack inside End-to-End Accounting, with bookkeeping, reporting and the tax filing under one roof and the fee quoted in writing after a free 15-minute discovery call.
Running one or two doors alongside a day job? CPA Quick Support at $99/month puts a CPA on call for the deposit-interest, expense-coding and CRA-letter questions without a full engagement.
Source: CRA — GST/HST for businesses.
