Québec rental income: how to fill out form TP-128-V

If you live in Québec and rent out a property, you report the rent twice: once on your federal return with Form T776, and once on your Québec return with form TP-128-V. The two follow the same ideas, but Québec has its own form, its own line and a few obligations the federal return does not have.

This guide is general information, not tax advice. Check Revenu Québec's publications or an accountant for your own situation.

What form TP-128-V is

The full name is TP-128-V, Income and Expenses Respecting the Rental of Immovable Property. Revenu Québec says it is filed by an individual who earns rental income as the sole owner or co-owner of immovable property. ("Immovable" is the Québec civil-law word for real estate.)

Its companion guide is the brochure IN-100-V, Individuals and Rental Income, which explains how rental income and expenses are taxed in Québec.

Like the T776, the TP-128-V starts from the rents you received, subtracts the expenses you paid to earn them, then subtracts capital cost allowance (CCA) where applicable. The result is your net rental income or loss.

Where it goes on your Québec return

Your net rental income goes on line 136 of your Québec income tax return.
A rental loss is entered on line 136 as a negative amount, with a minus sign, so that it reduces your other income.
You enclose form TP-128-V, or your own statement of rental income and expenses.
Revenu Québec asks for a separate form or statement for each immovable. Two duplexes mean two forms.

Two special cases:

If your rental activity is in fact a business, the income is not reported on line 136 but on line 22 of Schedule L.
If you own a rental through a partnership, your share of its rental income or loss is in box 3 of your RL-15 slip (or in the partnership's financial statements if you did not get one).

How it parallels the federal T776

The concepts are the same on both forms, so most of the work you do for one carries over to the other:

Who reports: the owner, or each co-owner for their share.
Income: the rents and other rental income of the year.
Current expenses: deducted in full in the year.
Capital expenses: added to the cost of the property and deducted over time through CCA.
CCA cannot create or increase a rental loss. Revenu Québec states this rule for line 136 too.

The line numbers are different, though. The T776 uses CRA line numbers such as 8960 for repairs and maintenance; the TP-128-V has its own numbering. Fill each form from its own instructions rather than copying line numbers across.

Current expenses Revenu Québec lists

Revenu Québec gives these examples of current expenses you can deduct:

Advertising to find tenants.
Insurance premiums and property taxes.
Interest on loans used to buy, maintain or improve the property.
Costs of getting a loan, such as insurance the lender requires: these are deducted in equal parts over five years. If the loan is repaid early, the rest can be deducted that year.
Maintenance and repairs that bring the building back to its original condition. If you do the work yourself, you deduct the materials, not the value of your labour.
Landscaping of the grounds, except sidewalks, paths, parking areas and retaining walls.
Bookkeeping and audit fees.
Legal fees, except those for buying or selling the property.
Wages of people who maintain or operate the property.
Heating, electricity, water and Internet.

Capital expenditures and CCA

Costs to acquire, improve or add to a property are capital expenditures. Revenu Québec is clear that they are not deductible in the year you pay them: they are added to the capital cost of the property and may qualify for capital cost allowance, which you calculate on the TP-128-V.

Deciding whether a cost is a repair or an improvement follows the same reasoning as on the federal side: restoring the property to its original condition is generally current, making it better than it was is generally capital. Our T776 guide walks through the four questions the CRA uses.

Québec-only obligations

Form TP-1086.R.23.12-V for work on the property

This is the one federal-only filers miss. If you paid for renovation, improvement, maintenance or repair work on a property in Québec that you use to earn income, you must complete form TP-1086.R.23.12-V, Costs Incurred for Work on an Immovable, and enclose it with your return. You give the required information about each person or business that did the work.

Some work does not need to be reported: work done by a gas, telecommunications or electricity network operator, by a government body, or by you or your employees.

Revenu Québec says the form must be filed by the return deadline even if you would not otherwise have to file a return, and that leaving out the information can bring a penalty: its penalties page lists $200 or more for this form. Keep your contractors' invoices and details handy all year.

RL-31 slips for your tenants

As a landlord, you must file an RL-31 slip for each eligible dwelling for which rent was paid or payable on December 31. Copy 1 goes to Revenu Québec and a copy goes to each tenant and subtenant, who use it to claim the solidarity tax credit. The slips are due by the last day of February of the following year.

Practical tips

Keep one set of records per property, since each needs its own TP-128-V.
Record the co-ownership percentage and keep it consistent with what you report federally.
Tag every contractor payment with the contractor's details as you go: it makes TP-1086.R.23.12-V quick to fill.
Keep a yearly record of the CCA you claim on each return: it matters when you sell, because part of it can be added back to your income.

How Indivia helps

On the Real-Estate Investor plan, every revenue and expense category in Indivia carries both its T776 line and its TP-128 line, so one set of entries serves both returns.

Reports, Properties by tax line shows each taxpayer's year on the T776 and, below it, the same year on the TP-128, with one card per property (handy, since Québec wants a form per immovable) and one for all rentals together, at each owner's share. The CCA claimed you record each year on the property's Cost base and gain tab is included, and the net income shown is after CCA.

Repairs and improvements keeps repairs apart from capital improvements, with the quotes, photos and invoices of each job, and the receipts you attach stay with the entries for when you fill in your forms. You can export the summary to CSV, print it, or share the year with your accountant through a time-limited link.

Sources

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