Self-employed with rental income: what to prepare

If you work for yourself and also rent out property, organize the two activities separately before preparing your return. One set of bank statements may contain several kinds of income and spending; it does not tell the whole tax story.

CRA sources checked October 23, 2026. This guide focuses on personally held activities; corporate ownership and partnerships may require a different approach.

Do I need both T2125 and T776?

A sole proprietor commonly uses T2125 to report business or professional activity. T776 is used to calculate income and expenses from real estate rentals. Having both activities can therefore mean including both kinds of reporting with your personal return. Separate businesses may require separate T2125 forms.

A rental operation is not always treated as property income. CRA considers the services provided to tenants; substantial additional services can indicate a business. Short-term rentals, corporate ownership and mixed personal use deserve a specific review.

1. Create a folder for your self-employed work

• Income summaries, invoices, commission statements and platform reports.
• Expense records grouped by business activity, with receipts available.
• Vehicle-use records, workspace details and equipment purchases, where relevant.
• Prior-year business schedules and GST/HST information, if applicable.

Include every business activity in your summary. The records can differ for a trade or contracting business, a healthcare practice or self-employed and commission-based work. Describe each activity so the preparation discussion covers your situation.

2. Create a separate folder for each rental property

• Rental income summary, leases and platform statements, if used.
• Expense invoices and statements, including financing records that distinguish interest from principal payments.
• Ownership details, dates available for rent and periods of personal use.
• Purchase or sale documents, renovation invoices and prior rental schedules.

Keep major improvements identifiable instead of combining them with routine maintenance. The records help determine the appropriate treatment; a cost appearing on a statement does not automatically make it deductible. Explore rental property tax preparation.

3. Explain overlaps and changes

Flag expenses that relate to more than one activity, reimbursements, mixed personal use and transfers between accounts. Keep the underlying receipt and a note explaining its purpose. Do not count the same expense twice. Tell us about a new property, a sale, a new business or a change in ownership.

Use the printable document checklist for additional records. See what affects the preparation fee before requesting a quote.