Tax Shelter

A legal strategy or investment that reduces taxable income. Rental real estate in Canada offers some tax advantages — mortgage interest and operating expenses are generally deductible against rental income, and Capital Cost Allowance (CCA) can reduce taxable income — but CCA cannot be used to create or increase a rental loss, is clawed back as recapture on sale, and has interplay with the principal-residence exemption. There is no general Canadian equivalent of a US 1031 exchange: rollovers and replacement-property rules are narrow. Tax outcomes vary by property type, ownership structure, and individual circumstance — consult a CPA.