If you borrowed money to earn income and paid interest on that loan, you might be able to deduct the interest as an expense on your tax return.
Some of the interest expenses the Canada Revenue Agency (CRA) allows you to claim are:
- Interest paid on money you borrowed to invest/earn investment income (this includes dividends). Keep in mind, this doesn’t include income from an RRSP, TFSA, or if your investment income is considered a capital gain.
- Interest paid on a policy loan, if the policy loan amount is used to generate income from a business or property. You’ll need to verify the amount with the insurer using CRA form T2210.
While interest paid on personal loans (such as a mortgage) or on credit cards is not claimable, you might be able to claim some of the interest if the property was used to generate income or if you used a personal credit card to pay for business expenses. You’ll need to keep a track of how you used the loan and the income generated from it in order to deduct the interest as an expense.
Note: If you paid interest on a government student loan, check out our help centre article for information on how to claim it on your return: Student loan interest paid in 2018 or interest not claimed in a previous year
Where do I claim it?
Follow these steps in H&R Block's 2018 tax software:
- Under the PREPARE tab, click IN THIS SECTION icon.
- In the Investments box, click the Add This Topic button.
- Click the PENSION PLANS AND INVESTMENTS icon. You'll find yourself here:
- Under the INVESTMENT INCOME section, select the checkbox labelled Statement of investment income, carrying charges, and interest expenses. If you’re a Québec resident, select Statement of investment income and adjustment of investment expenses (federal worksheet/Schedule N).
- When you arrive at the selected page, enter your information into the tax software.