Owning a duplex or triplex in Quebec offers attractive rental income, but also specific taxation that must be mastered. Here is the complete calculation in 2026: tax rates, deductible expenses, amortization (CCA) and principal residence exemption.
1. Combined federal + Quebec tax rate in 2026
Net rental income is added to your personal income and taxed at the combined marginal rate. 2026 brackets:
- Up to $53,359: ~27.5%
- $53,359 to $106,717: ~37.1%
- $106,717 to $165,430: ~47.5%
- $165,430 to $246,752: ~50.0%
- Above $246,752: ~53.3%
On $18,000 net rental income, typical tax is $5,000 to $8,500 for an owner with average salary income of $75,000.
2. Fully deductible expenses
- Mortgage interest — interest portion only, not principal.
- Municipal and school taxes — prorated if partial occupancy.
- Home and liability insurance.
- Utilities paid by owner (common electricity, gas, water).
- Maintenance and small repairs — paint, emergency plumbing, snow removal.
- Property management and accounting fees.
- Re-rental advertising.
- Property-related travel — per km, mandatory log book.
Major improvements (new roof, window replacement, kitchen redo) are not deductible the year of payment: they are added to the capital cost and amortized via CCA, or recovered through capital gain at sale.
3. CCA Class 1 amortization — tool or trap?
Buildings fall under Class 1 with a maximum amortization rate of 4% per year(declining balance method). Land is never amortizable.
Example: triplex $750,000
- Taxable building cost: ~$525,000 (70% of price, 30% land)
- CCA year 1: 4% × $525,000 × 50% (first-year rule) = $10,500
- CCA year 2 and following: 4% × residual balance
Warning: CCA is a tax deferral, not an exemption. At sale, amortization recapture is taxed at 100% as ordinary income, before capital gain. Common strategy: take CCA only when you have positive net rental income to neutralize.
4. If you live in a portion (50/50 duplex, 33/33/33 triplex)
You only declare income from rented portions and deduct the corresponding portion of common expenses.Example: 50/50 duplex:
- Tenant rent: $24,000/year — 100% declared
- Total municipal taxes $6,000 — 50% ($3,000) deductible
- Total mortgage interest $12,000 — 50% ($6,000) deductible
- Insurance, maintenance: same 50% rule
The principal residence portion generates no taxable income and remains exempt from capital gains at sale. This is the major tax advantage of living in your own plex.
5. Optimization — 4 levers to activate
- Maintain a detailed log of every expense, mileage and receipts.
- Use CCA strategically — only if income remains positive after other deductions.
- Capitalize major improvements to increase adjusted cost base at sale.
- Combine with RRSP/TFSA — channeling rental income into RRSP reduces current tax.
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