Rent And Income Tax: What University Students Need To Know

University students cannot claim rent as a tax deduction or credit on their income tax return. However, they may be eligible for the Ontario Energy and Property Tax Credit if they meet the applicable criteria. This benefit is generally paid to low-to-moderate-income individuals of at least 18 years of age for paying rent or property tax. Additionally, students in Ontario, Manitoba, or Quebec may be eligible for some tax relief in the form of refundable property tax credits on rent/property taxes paid in the year if they reside in the province on December 31.

Rent is not a tax-deductible expense for university students

University students cannot claim rent as a tax-deductible expense on their personal tax returns. Rent paid by a student for their residence is generally considered a personal expense and is not eligible for tax deductions or credits. This means that students cannot deduct rent expenses from their taxable income when filing their tax returns.

However, it is important to note that while rent itself is not deductible, there may be other tax benefits available to students related to their housing situation. For example, in certain provinces or states, students may be eligible for property tax credits or other housing-related tax benefits. These benefits can help offset the cost of rent, but they are not considered tax deductions from income.

In some cases, students may be eligible for specific credits or benefits based on their province or state. For instance, in Ontario, students may be eligible for the Ontario Energy and Property Tax Credit if they meet certain criteria. This credit is typically available to low-to-moderate-income individuals who pay rent or property tax. Similar credits or benefits may be offered in other locations, so it is important for students to research the specific rules and eligibility requirements in their area.

Additionally, while rent may not be deductible, there are other education-related expenses that students can claim for tax purposes. These may include items such as tuition fees, textbooks, and other eligible educational expenses. Students should review the list of qualified education expenses provided by their local tax authorities to understand what they can and cannot claim.

Overall, while rent is not a tax-deductible expense for university students, there may be other tax benefits and credits available to help offset the cost of housing and education. Students should stay informed about the specific rules and eligibility criteria to take advantage of any applicable tax benefits.

Students may be eligible for the Ontario Energy and Property Tax Credit

To be eligible for the energy component, an individual must be a resident of Ontario and meet at least one of the following conditions:

• Be 18 years of age or older before the specified date.
• Have a spouse or common-law partner.
• Be a parent who lives or previously lived with their child.

In addition, at least one of the following conditions must apply for the energy component:

• Rent for the principal residence, which is subject to Ontario municipal or education property tax, was paid by or for the individual.
• Property tax for the principal residence in Ontario was paid by or for the individual.
• The individual lived on a reserve in Ontario, and home energy costs (e.g. electricity, heat) for the principal residence on the reserve were paid by or for them.
• The individual lived in a public or non-profit long-term care home in Ontario, and an amount for accommodation was paid by or for them.

To be eligible for the property tax component, an individual must be a resident of Ontario and meet at least one of the following conditions:

• Be 18 years of age or older before the specified date.
• Have a spouse or common-law partner.
• Be a parent who lives or previously lived with their child.

Furthermore, at least one of the following conditions must be met for the property tax component:

• Rent for the principal residence, which was subject to Ontario municipal or education property tax, was paid by or for the individual.
• Property tax for the principal residence was paid by or for the individual.
• The individual lived in a designated Ontario university, college, or private school residence.

It is important to note that the OEPTC is not provided automatically. Individuals must apply for it by completing and attaching Form ON-BEN to their income tax return. The OEPTC is now paid as part of the Ontario Trillium Benefit (OTB), which combines the OEPTC, the Ontario sales tax credit, and the Northern Ontario energy credit. The OTB is typically issued monthly, and individuals must be eligible for at least one of the credits to receive the OTB.

The tuition and education tax credits do not consider rent as an expenditure

The rental expense cannot be claimed as either a tax deduction or a tax credit. This means that rent is not one of the expenditures considered for the tuition and education tax credits available to students and parents. However, students may be eligible for the Ontario Energy and Property Tax Credit if they meet the applicable criteria. This benefit is generally paid to low-to-moderate-income individuals of at least 18 years of age for paying rent or property tax.

The Ontario Income Tax Act stipulates that students living in designated university (tax-exempted) student residences are limited to an Ontario Energy and Property Tax Credit claim based on an occupancy cost of $25 for the time they resided in the student residence. Therefore, the amount that can be claimed for income tax purposes is $25 and not the full amount of residence fees paid.

In Ontario, the credit starts to erode when income is over $4,000 and is reduced by 2% of income in excess of that amount. In Quebec, the credit erodes at income over $26,700. In Manitoba, there is no ceiling; some credit is available at all income levels.

It is important to note that the formulas for computing these credits are complicated, combining income, the amount of rent/property tax, and the sales tax credit.

Refundable property tax credits are available in Ontario, Manitoba, and Quebec

In Ontario, the Ontario Energy and Property Tax Credit (OEPTC) is available to help low- to moderate-income residents with the sales tax on energy and property taxes. The OEPTC has two components: an energy component and a property tax component. To be eligible for the energy component, you must be a resident of Ontario and have paid rent or property tax for your principal residence in the province. For the property tax component, the same eligibility criteria apply, except you must be 18 years of age or older before June 1 of the following year. The maximum 2024 OEPTC is $1,248 for non-seniors and $1,421 for seniors.

In Manitoba, there is a refundable Residential Renters Tax Credit that provides savings of up to $525 per year for individuals who rent their principal residence. This includes those renting a social housing property and those who claim non-EIA rent assistance benefits. Seniors are eligible for a maximum top-up amount of $300 minus 0.75% of family net income. For the 2025 tax year, the credit will be increased to up to $575, and the seniors' top-up will be increased to a maximum of $328.

In Quebec, the Charter of the French Language and its regulations govern the consultation of English-language content. While there is no specific mention of refundable property tax credits, there is information on tax credits in French that may be relevant.

Students can claim $25 as an occupancy cost for living in a designated university residence

Students cannot claim rental expenses as a tax deduction or a tax credit. However, students living in designated university residences in Ontario can claim $25 as an occupancy cost for the time they resided in the student residence. This is because universities are exempt from paying municipal property taxes under the Income Tax Act. The relevant box can be ticked on Line 6114 (Student Residences) of the income tax return.

The Ontario Energy and Property Tax Credit is available to low-to-moderate-income individuals of at least 18 years of age. This credit is based on a combination of income, the amount of rent/property tax, and the sales tax credit. In Ontario, the credit starts to decrease when income exceeds $4,000 and is reduced by 2% of income above that amount.

In Quebec, a similar credit is available to low-income earners, but the credit starts to decrease at an income of over $26,700. In Manitoba, there is no ceiling on income levels to receive this credit.

Frequently asked questions