saving taxes on rental income..

[tool001]

i have rental income and it barely covers mortgage/taxes/etc. however as i cannot write of the principle amount , i am looking for legit ways to save taxes.


i was reading about cca deductions.. is anybody using this to save on taxes

also a friend of mine mentioned

open a business and show rent going to business, and a bunch of expense? i am not sure about this and will need more info. .. but might be worth looking into?


CAN others chime in

[fsy82]

Rental income on a corporate tax rate is much higher. Its better to keep showing your rental income in your personal tax return. I suggest you write of the building at 4% per year per the CCA guidelines.

Also whats a bunch of expenses? I hope your friend isn't telling you to make up shit and "hope" you don't get audited.

[lowside67]

Originally Posted by fsy82

Rental income on a corporate tax rate is much higher. Its better to keep showing your rental income in your personal tax return. I suggest you write of the building at 4% per year per the CCA guidelines

You cannot depreciate the building per CCA guidelines if you own it personally and are claiming the rental income on your personal tax return.

[Wild_Penguin]

I have a guide line somewhere I'll have to look for it. Because I also have rental income. The one I know about that many don't is that you can write "your time" off. So the hours you spend showing the unit, or having to pick up rent, fixing things ect. I just know that my Accountant told me to keep track of all the time I spent with my unit.

Edit: Also I great website for this question is http://canadianmoneyforum.com a lot of helpful people on there.

Edit #2: I just found this in my bookmarks http://www.cra-arc.gc.ca/tx/bsnss/tp.../menu-eng.html

I hope some of this helps.

[tiger_handheld]

Originally Posted by lowside67

You cannot depreciate the building per CCA guidelines if you own it personally and are claiming the rental income on your personal tax return.

Do you have a source for that?

I agree with fsy's point. Take 4% cca on building and pay cap gains when you sell it.

@cougarboy - how do you write off your time? what rate do you use? I'm $1000/hr and I spend 24 hours per year on admin stuff. Does that mean I get a $24000 deduction?


OP- sounds like you still have a mortgage on your house. Once the interest is deducted there shouldn't be much profit left over. Some ideas you may or may not already have thought of:

- claim home office on your current property and apply against rental income

- repairs & maint done to the rental property. if you rent the basement, only items done to the basement are deductible.

- take CCA on equipment (washer dryer appliances in the rental suite)

- claim travel costs (cra has a rate for per km and apply to km's incurred to trips to property)

- Utilities (property tax ,hydro water insurance etc)

- if you have a son or daughter with no formal job. Expense $3500 (or whatever the yearly CPP / EI exempt limit is) as admin fees. Be sure to claim the $3500 in your son/daughters tax return as self employment income. Works with the wife too, but if the wife works, the extra could cause her to get bumped into the next bracket. You will have to write a physical check to whoever you pay and get them to give you some cash back. if you dont create a paper trail, during an audit cra might deny you the expense and keep the income as valid for your son/daughter.

[lowside67]

Originally Posted by tiger_handheld

Do you have a source for that?

I agree with fsy's point. Take 4% cca on building and pay cap gains when you sell it.

I should be more clear. I am assuming that the OP is renting a suite in their house. What I had meant to imply was that you can't simply take 4% carte-blanche, you are only going to be able to claim it for the proportional amount of your rental suite which for a lot of people is going to be a pretty nominal amount.

[lowside67]

Originally Posted by cougar_boy

I have a guide line somewhere I'll have to look for it. Because I also have rental income. The one I know about that many don't is that you can write "your time" off. So the hours you spend showing the unit, or having to pick up rent, fixing things ect. I just know that my Accountant told me to keep track of all the time I spent with my unit.

The reason most don't know that is because that's not really that accurate.

Line 89 60 - Maintenance and repairs
If you pay for repairs to your property, you can deduct the cost of labour and materials. However, you cannot deduct the value of your own labour.

Line 9060 - Salaries, wages, and benefits
You can deduct amounts paid or payable to superintendents, maintenance personnel, and others you employ to take care of your rental property. You cannot deduct the value of your own services.

Value of your own labour
You cannot deduct the value of your own services or labour.

Rental Income 2011