Interest paid on investment property (condo)

Interest Paid Before the Property Is Rented

If you own an investment property (e.g., a condo) and you’re paying loan interest before it’s available for rent, you cannot immediately deduct that interest on your tax return. The CRA requires that expenses (including interest) must be incurred to earn rental income.

So, if the property is not yet available for rent (e.g., under construction, or awaiting possession/occupancy approval), the interest during this pre-rental period is not deductible as current rental expense.

When the Condo Is Rented Out

Once the condo becomes available for rent, you can start claiming eligible expenses, including loan interest, on the T776 form in the year it becomes available.

The interest portion of your mortgage/loan goes under Line 8710 – Interest and bank charges.

Other related expenses (property taxes, condo fees, repairs, etc.) are also claimable from the date the unit is available for rent.