Running a Small Strata | Taxes
Taxes and a Small Strata
Every strata corporation, a duplex strata included, must file a T2 corporation income tax return with the Canada Revenue Agency every year, even when it owes no tax. Owners can deduct strata fees only on a unit that earns rental income. This page covers the strata's filings, the T1044 tests, the questions our sources do not settle, the records to keep, and what owners can and cannot deduct.
The short answer
- 01Yes, a strata corporation files a tax return. The Canada Revenue Agency (CRA) says all corporations, including non-profit organizations and inactive corporations, must file a T2 return for every tax year, even if no tax is payable.
- 02CRA says most residential condominium corporations qualify as non-profit organizations. Such a strata must also file form T1044 if it had more than $10,000 of interest, dividends, rent or royalties, or more than $200,000 of assets at the end of the previous year, or filed one before.
- 03Whether a strata must also file a T3 trust return is not confirmed by our sources. CRA's bare trust page does not mention strata corporations.
- 04Owners: strata fees on a unit you rent out are deductible from rental income. CRA lets you deduct condo fees that represent your share of the upkeep, repairs, maintenance and other current expenses of the common property.
- 05Strata fees on the home you live in are not deductible. If you rent out part of your home, you deduct only the share for the rented part, split by square metres or number of rooms.
- 06How CRA treats a special levy for major work is not confirmed by our sources. Ask an accountant.
Do strata corporations file tax returns?
Yes. A strata corporation is a corporation created by the Strata Property Act when the strata plan is filed (s.2). The Canada Revenue Agency (CRA) says: "All corporations (including non-profit organizations, tax-exempt corporations, and inactive corporations) have to file a T2 return for every tax year, even if there is no tax payable." The only exceptions CRA lists are tax-exempt Crown corporations, Hutterite colonies and registered charities. A strata is none of those.
The Province says the same in its budgeting guide: "The strata corporation must file a tax return for each fiscal year with the Canada Revenue Agency." There is no size exemption. A 2-lot strata with no income other than strata fees still files.
CRA also says "most residential condominium corporations qualify as non-profit organizations under paragraph 149(1)(l)" of the Income Tax Act. Whether your strata qualifies, and what that means for its tax, is a question for the person who prepares the return.
Form T1044: the non-profit information return
A strata that qualifies as a non-profit organization under 149(1)(l) must also file form T1044 for a fiscal year if any of these is true (CRA guide T4117):
| Test | Result |
|---|---|
| Received more than $10,000 in the fiscal year from interest, dividends, rent or royalties | T1044 required |
| Total assets of more than $200,000 at the end of the previous fiscal year | T1044 required |
| Had to file a T1044 for a previous fiscal year | T1044 required |
| None of the above | T1044 not required. The T2 is still required. |
The T1044 is due 6 months after the end of the fiscal year. The late penalty is $25 a day, with a minimum of $100 and a maximum of $2,500.
Reserve fund money is one of the strata's assets. In a small strata that saves 10% of its operating budget each year, the reserve grows every year, so check the $200,000 test at each year end. Once a strata has filed a T1044, the third test means it keeps filing.
Questions our sources do not settle
The T3 trust return. In April 2024 an owner asked a BC strata advice column whether even a duplex strata has to file a tax return and a trust return. The tax return part is settled: yes, a T2. The trust return part is not settled by any source we found. CRA's page on the reporting rules for trusts and bare trusts, modified October 5, 2026, does not mention strata corporations. Ask an accountant who files for stratas, and ask them to show you the CRA text they rely on.
An audit. In February 2023 an owner asked whether a small strata must file tax returns and have its books checked by an outside accountant. We searched the full text of the Strata Property Act and Regulation and found no audit requirement for a strata's own books. The only audit right in the Act is the strata's right to copy or audit the owner developer's pre-handover financial records, at the strata's cost, for 2 years after handover (s.23). Your own bylaws may add a rule, and owners can put the cost of a review in the budget.
GST on strata fees. Our sources do not cover it, so we give no answer. Ask CRA or an accountant.
Records for tax time
The strata must keep its income tax returns for at least 6 years, along with minutes, books of account, budgets, financial statements and bank records (s.35(2); Regulation s.4.1(3)). Most of what a T2 preparer needs is already on that list.
Within 8 weeks after each fiscal year ends, the strata must prepare a financial statement updated to the year end (Regulation s.6.7). That statement is the natural starting point for the T2. If the strata pays someone to prepare its returns, put that cost in the operating budget so owners approve it at the AGM. The budget page lists the lines the Regulation requires, and the forms and records page gives every retention period.
A strata can change its fiscal year end by a 3/4 vote after the first AGM (s.102). If you do, check the effect on the filing dates with your preparer.
Are strata fees tax deductible for owners?
CRA's rental income guide (T4036) says: "If you earn rental income from a condominium unit, you can deduct the expenses that you would usually deduct from it. You can also deduct condominium fees that represent your share of the upkeep, repairs, maintenance, and other current expenses of the common property." CRA uses the word condominium for what BC law calls a strata.
| Your situation | Can you deduct strata fees? | Source |
|---|---|---|
| You rent out the whole strata unit | Yes. Deduct the strata fees that represent your share of the upkeep, repairs, maintenance and other current expenses of the common property. | CRA T4036 |
| You live in the unit | No. Personal or living expenses cannot be deducted, and CRA lists condo fees only as a rental expense. | Income Tax Act s.18(1)(h); CRA T4036 |
| You live in the unit and rent out part of it | Only the share that relates to the rented part. CRA says you can split expenses by square metres or by the number of rooms you rent. | CRA T4036 |
| A special levy for major work on a rental unit | Not confirmed by our sources. Ask an accountant. | None found |
The Income Tax Act bars deducting "personal or living expenses" (s.18(1)(h)), and CRA's guide lists condo fees only as a rental expense. So the fees on the unit you live in are not deductible.
The guide's words are "current expenses", which CRA describes as "recurring expenses that provide a short-term benefit." We found no CRA text on how it treats a strata special levy for major work. Ask an accountant before you claim one.
Example only: made-up numbers to show the arithmetic
You live in a 100 square metre strata unit and rent out a 25 square metre part of it all year. Your strata fees are $4,800 a year. Using CRA's square metre method, the rented share is 25 divided by 100, or 25%, so the fee amount for the rental is $1,200 a year. These figures only show the arithmetic. Use your own areas, or the number of rooms, and keep your strata fee notices.
Other taxes on a small strata
Selling strata units brings in other taxes: GST on new homes, the BC property transfer tax and its newly built home exemption, and the BC home flipping tax. Those fall on the seller or buyer of a unit, and the selling strata units page covers them. The GST rebate page covers the rebates on a new multiplex.
Best For
- ✓ A small strata that puts the T2 filing on the AGM calendar and a line for it in the budget.
- ✓ A strata that checks the two T1044 tests at every year end: income over $10,000, and assets over $200,000 at the end of the previous year.
- ✓ An owner who rents out a unit and keeps the strata's fee notices and levy notices with their rental records.
Usually Fails When
- ✕ Owners of a duplex strata assume a corporation with no income has nothing to file.
- ✕ A strata that filed a T1044 once stops filing it. Having filed one before is one of the tests.
- ✕ An owner deducts strata fees on the home they live in.
What To Verify Before Spending Money
- → The strata's fiscal year end, which sets the filing dates.
- → The reserve fund balance and yearly interest, which drive the T1044 tests.
- → With an accountant: the T3 question, any special levy you plan to deduct, and GST on strata fees.
Common questions
Do strata corporations file tax returns? +
Yes. CRA says all corporations, including non-profit organizations, tax-exempt corporations and inactive corporations, must file a T2 return for every tax year, even if there is no tax payable. The Province also says the strata must file a tax return for each fiscal year with CRA. A duplex strata is a corporation like any other.
Are strata fees tax deductible? +
On a unit you rent out, yes. CRA's rental income guide says you can deduct condominium fees that represent your share of the upkeep, repairs, maintenance and other current expenses of the common property. On the home you live in, no: the Income Tax Act bars deducting personal or living expenses.
Are strata fees tax deductible in Canada? +
Only against rental income. CRA guide T4036 lists condominium fees as a rental expense for a unit that earns rental income. It gives no deduction for fees on a home you live in, and the Income Tax Act bars deducting personal or living expenses (s.18(1)(h)).
Can I claim strata fees on tax? +
You can claim them as a rental expense if you rent out the strata unit, or claim the rented share if you rent out part of the home you live in. CRA says you can split expenses by square metres or by the number of rooms you rent. You cannot claim them on a home you only live in.
Can you claim strata fees on an investment property? +
Yes, if the property earns rental income. CRA says that if you earn rental income from a condominium unit, you can deduct the expenses you would usually deduct, and also the condominium fees that represent your share of the upkeep, repairs, maintenance and other current expenses of the common property.
Can you deduct strata fees from rental income in Canada? +
Yes. Strata fees on a rented unit are a deductible rental expense under CRA guide T4036. If the unit is rented for only part of the year or only part of it is rented, deduct only the share that relates to the rental.
Can you write off strata fees? +
Only against rental income from the unit. Fees on your own home are personal or living expenses and cannot be deducted (Income Tax Act s.18(1)(h)). Special levies for major work are not covered by the CRA text we found, so check those with an accountant.
What is form T1044? +
The Non-Profit Organization Information Return. A strata that qualifies as a non-profit under paragraph 149(1)(l) must file it if it received more than $10,000 of interest, dividends, rent or royalties in the year, had more than $200,000 of assets at the end of the previous year, or filed one before. It is due 6 months after the fiscal year ends, and the late penalty is $25 a day, at least $100 and at most $2,500.
Does a strata have to file a T3 trust return? +
Not confirmed. CRA's page on the reporting rules for trusts and bare trusts (modified October 5, 2026) does not mention strata corporations, and we found no other CRA text that answers it. Ask an accountant who files for stratas.
Does a small strata need an audit? +
We found no audit requirement for a strata's own books in the Strata Property Act or the Regulation (full-text search). The Act gives the strata a right to copy or audit the owner developer's pre-handover financial records, at its own cost, for 2 years after handover (s.23). Your bylaws may add a rule.
How long must a strata keep its tax returns? +
At least 6 years. The Regulation sets 6 years for income tax returns, along with minutes, books of account, budgets, financial statements and bank records (Strata Property Act s.35(2); Regulation s.4.1(3)).
Is there GST on strata fees? +
Our sources do not cover GST on strata fees, so we do not answer it here. Ask the Canada Revenue Agency or an accountant.
Are special levies tax deductible? +
Not confirmed. CRA's rental income guide covers condominium fees for upkeep, repairs, maintenance and other current expenses, and we found no CRA text on special levies for major work. Ask an accountant before you claim one.
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