Statistics Canada data reveals the Canadians most likely to be earning rental income and how much they make – for now
Owning real estate for the residential rental market can provide good levels of income and a new analysis reveals some interesting information about a typical Canadian landlord.
Statistics Canada’s report highlights how historically-low interest rates have fuelled purchase of secondary dwellings for investment purposes in the last decade or so.
In 2008, 7% of Canadian families declared rental income, rising to 8% by 2020 – an additional 335,850 families. The 2020 figures for median annual rental income after deductions was $2,750, or around 2% of these families’ total income.
More than half of couple families with rental income (52%) had at least two net rental income earners, suggesting they are sharing the risks and rewards of rental income, and often paying lower tax rates than if the income was received by one individual.
The highest share of families with reported rental income was in Vancouver (11%).
However, the higher cost of borrowing due to the Bank of Canada’s interest rate hikes could mean a reduction in the number of families making rental income in 2022, or a lower amount of income.
Who’s in the money?
Using tax filings, the analysis found that couple families were most likely to receive rental income (11%) – especially those with children (13%) - compared to lone parent families (5%) and those not in families (4%). Higher income families were more likely to own property to rent out.
Couple families without children made the highest median net rental income at $3,190.
The data also reveals that 47% of rental income earners were aged 45-64 years, and most lived in the CMAs of Toronto (21%), Montreal (14%), or Vancouver (11%).
The share of 30- to 34-year-olds receiving net rental income rose from 4% in 2000 to 5% in 2020, the share of 35- to 39-year-olds rose from 5% to 7% and the share of 40- to 44-year-olds rose from 6% to 8%.
Two thirds of landlords also earn wages, salaries, and commissions.
Those with higher incomes (aside from their rental income) are more likely to be higher earners, with a median $59,800 in 2020 compared to $38,570 among those without rental income.
While house prices have been rising sharply in recent years, before starting to ease in 2022, owning rental property still represents a good investment for capital gains.
While there are risks that the costs of ownership can wipe out rental income, the Statistics Canada research shows that this is unlikely.
In 2020, just over three-quarters of families were turning an annual profit on their rental property as they have positive net rental income, up from 63% in 2008.
Net rental income in 2020 was $4,880 among families who reported positive net rental income, while families with negative net rental income reported a median of -$3,180.