Farmland Rental Income

[Bergen]

In 2022 I have inherited farm land. I have now been paid for renting this land out from a local farmer.  

What forms do I need to fill out? 

If the rental income is low do I even need to claim this? 

[Maggie3]

Hello Bergen,
If renting farmland you must fill in Form T776 Rental Income.  

To enter information about your rental income, follow the steps below:

1. On the "Left-side menu on the Interview tab", select "Interview setup".

2.  On the page that appears to the right, go to the "Rental income" group, check the box "Rental property income" also if you paid tax by instalments. Then go to "Tax paid by instalments and tax transfer" group, check the box "Tax paid by instalments and tax transfer" and click "Next" at the bottom of the page.

3. Return to the "Left-side menu on the Interview tab", select "Rental Income".

4.  On the page that appears to your right, click on the plus sign "+" icon to the right of the line "T776 - Rental Income property".

5. Complete the first page entitled "T776 - Rental property identification". On the line for "Percentage (%) of personal use of your rental property", enter your personal use portion of the building. If you do not live in the building, leave the field blank.

(If you are the co-owner of the building with your spouse see point #11)

6. Please indicate whether you are sole proprietor or co-owner of the property, to do so, go to the "Type of ownership of the rental property" line and select the option that suits you best from the drop-down menu. Then, on the line "Percentage interest in the partnership" enters your percentage.

7. On the next page, enter your income and expenses in relation to this property.

8. If you used the services of a professional contractor to repair your building, use the sub-section "Labour costs" to enter the relevant information. Please make sure in this subsection that the amount of repair has not already been entered in the expenses beforehand: make sure to choose the appropriate option from the drop-down menu for the line "Do you wish to add these labour costs as an expense on the income statement".

9. If you want to claim depreciation for your property, click on the "CCA" sub-section and select the appropriate class, usually Class 1.

10. On the page that appears, enter the relevant information. If you do not want to claim depreciation, go to the line "Limit to the CCA" and enter "$0.00". However if you wish to claim a portion of the depreciation or any other amount, it is limited to the maximum amount of this category. Please note that you cannot claim CCA when you have a rental loss.

11. If you are the co-owner of the building with your spouse or other partner, click on the sub-section "Partners", and on the page to the right, choose your option.

12. If your spouse is a co-owner of the rental property and completed his or her tax return along with yours, there is no need to enter the information in your spouse's file, as it will be transferred by the program and form T776 will be generated. The same applies for a resident of Quebec and form TP-128 will be produced by the program. However, if your spouse wants to claim expenses different from yours, all the information will then have to be entered again separately in his or her own file. For all other business partners, they will have to enter the information in their own file.

Forms T776 (federal) and TP-128 (Quebec) will be generated by the program.

The amount of rental income will be reported on line 12599 (gross) and line 12600 (net) of the federal return and, for Quebec residents, on line 168 (gross) and line 136 (net) of the Quebec return.

[Jewel]

Unfortunately, I just saw this now and the information Maggie3 provided is partially correct. Farmland rental does not go under the Statement of Real Estate Rentals if you earn more than $7000 in which case you would qualify as a farm business which would also allow you to apply for a discounted rate on your property taxes through the provincial Farm property class tax rate program. You could also register as a business and obtain an HST number. I do hope that you obtain tax advice from an accountant if you haven't already done so.

[Geo123]

Hello Jewel,

Thanks for the information.  It is recommended to consult with an accountant, as this forum is regarding the software and not for tax advice.