Yes, you can deduct mortgage interest as well as property tax and maintenance from your investment property in Canada. If you own multiple units and you are the one managing them you should also open a property management company and charge your properties a management fee which is also tax deductible.

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I own this home since feb/06. will i be able to deduct mortgage interest, taxes,maintenance and other expenses to any income i have to report (1099-c)? what about the downpayment i walked away from. in my case i put down 20k. my loan balance is $172k and properties in area are appraising for $172k-$177k. i purchased for $192k. i 've paid about 23k in interest only payments and other expenses in my attempt to try and sell and not ruin my credit. but i'm at the end of my rope. i would like to understand all the financial consequences of doing this "deed in lieu" beside of course ruining my credit. thanks sorry. the downpayment is for this house not another. haven't walk away from it yet.

Was it a rental property? If so, you should have filled out a schedule E for your 2006 tax return, and you would have been able to deduct the expenses that you have listed above, in addition to others related to the property (including depreciation). By doing a "deed in lieu" (which I have unfortunately done in the past) you are basically turning the property back over to the lender in exchange for your remaining loan balance. I'm not clear as to what the downpayment you walked away from is, is it this property or another property? If you purchased it for $192K and your loan balance (interest only loan) is $172K and you put down 20K then it would seem the downpayment you are talking about walking away from would be the 20K you would lose by doing the deed in lieu of. It seems to me though that you would have a loss of around 20K on this investment property. You bought it for 192k and would be giving it back to the lender in exchange for them forgiving your debt of 172k to them. therefore you would only lose your 20k downpayment. You would have to subtract from the 20k any depreciation that you incurred on the property. Also, just to let you know a deed in lieu does affect your credit, but not as much as a foreclosure would. One other thing you could consider doing would be seeing if your lender would allow a "short sale". That would be them allowing you to sell the property for less than you owe them, and them not asking you to make up the shortage.