Leasing costs - Motor vehicles used for rental income

You can deduct amounts you paid to lease a motor vehicle you used to earn rental income. Include the leasing costs you paid when you calculate your allowable motor vehicle expenses.

If you use a passenger vehicle to earn rental income, there is a limit on the amount of the leasing costs you can deduct. For more information, see Chart to calculate eligible leasing costs for passenger vehicles.

If the lease agreement for your passenger vehicle includes items such as insurance, maintenance, and taxes, include them as part of the lease charges on line 1 when you complete the applicable chart.

Repayments and imputed interest

When you lease a passenger vehicle, you may have either a repayment owing to you, or you may have imputed interest. If this is your situation, you cannot use the preceding leasing chart. Instead, contact us.

Imputed interest is interest that would be owing to you if you were paid interest on money you deposited to lease a passenger vehicle. You can only calculate imputed interest for leasing costs on a passenger vehicle if all the following apply:

• you made one or more deposits for the leased passenger vehicle;
• all deposits are refundable; and
• the deposits total more than $1,000.

Forms and publications

• Guide T4002, Business and Professional Income
• Guide T4036, Rental Income
• Form T2125, Statement of Business or Professional Activities
• Form T776, Statement of Real Estate Rentals

Related topics

• Chart to calculate eligible leasing costs for passenger vehicles
• Line 9281 - Motor vehicle expenses
• Motor vehicle - Leasing costs
• Type of vehicle you own or lease

Date modified:

2016-01-05