It would be more appropriate and simpler to report the net rental income (if greater than zero) on the Foreign Income slip as Other Income and the foreign taxes paid, if any. The form T776 is designed and used for rental income of Canadian properties. Consider all the provisions under the Income Tax Act for rental income that have no bearing on how that US income will be assessed, further, if there is a net loss it is simply stated as 'Zero' income, and not a loss.
The asset is still reported as an 'Foreign Property' on the T1135, if it is not used primarily for personal use.
