Tax Question: Rental income & Claiming Expenses

[wrx2k3]

What sort of expenses can you claim if you're a landlord? Ie, receives rental income?

Can you claim part or all of the utilities, maintenances, etc?

TIA

[Nathan183]

You can claim any expenses related to the rental property: utilities, maintenance, interest, etc.

If you're renting out a room in your home, you can only claim the portion that related to the rented room, usually by taking a percentage.

[wrx2k3]

You can claim any expenses related to the rental property: utilities, maintenance, interest, etc.

If you're renting out a room in your home, you can only claim the portion that related to the rented room, usually by taking a percentage.

So if I only have one house/room mate, totally two people in the entire house (me plus house mate), then I can claim 50% of the utils, etc?

[wrx2k3]

Anything pertaining to mortgage that I can claim? IE, part of the interest, etc?

[TrevorK]

So if I only have one house/room mate, totally two people in the entire house (me plus house mate), then I can claim 50% of the utils, etc?

If they use 50% of the house yes. However, if you get audited be prepared to defend yourself on this, so make sure your roommate doesn't say "Oh, I'm not allowed in the living room".

The easiest way to do this is in your rental agreement to specify that they are allowed to use any part of the house.

[grant]

This may seem obvious, but don't forget to declare the rent you collect as INCOME.

[sparkplug]

You can claim maintenance expenses such as paint, new fixtures, flooring, appliance repair and lawn care. Utilities can be a large chunk if you can claim heat, water, electricity, phone, cable, satellite radio, Internet and home security. Less common and often overlooked are items like newspaper subscriptions, which is a benefit/perk for your tenant. You can also buy furnishings for your tenant's use (like a recliner in the TV room), which your tenant can choose to leave behind after moving out.

Just keep your receipts for seven years or so.

[wrx2k3]

This may seem obvious, but don't forget to declare the rent you collect as INCOME.

Would it be a problem if you never issued receipts for your tenants? I mean, they didn't ask, so I didn't provide.

[grant]

Would it be a problem if you never issued receipts for your tenants? I mean, they didn't ask, so I didn't provide.

Ya it's a HUGE problem if you are claiming expenses for a rental but not declaring the income!

Even CRA is going to figure out pretty quick that something is amiss.

[Nathan183]

Ya it's a HUGE problem if you are claiming expenses for a rental but not declaring the income!

Even CRA is going to figure out pretty quick that something is amiss.


He didn't say he wasn't claiming the income!


It shouldn't be a problem, just make sure you have some documentation of the rental income (canceled cheques, bank statements).

[wrx2k3]

Ya it's a HUGE problem if you are claiming expenses for a rental but not declaring the income!

Even CRA is going to figure out pretty quick that something is amiss.

Definitely. If you're claiming expenses, you better claim the income. But if my tenant doesn't claim the rent he's paying, I don't have to worry right? I mean, that is up to him (whether to file or not).

[Bullseye]

Definitely. If you're claiming expenses, you better claim the income. But if my tenant doesn't claim the rent he's paying, I don't have to worry right? I mean, that is up to him (whether to file or not).

Of course, not your business at all if they claim or not.

[GeneralCho]

Your room-mate would not be claiming for rent payment because rent payment is not tax deductible. Unless your room-mate is operating a home-based business in your house.

[Bullseye]

Your room-mate would not be claiming for rent payment because rent payment is not tax deductible. Unless your room-mate is operating a home-based business in your house.

Rent is a tax credit in Ontario, if you're under a certain income.

[GeneralCho]

Rent is a tax credit in Ontario, if you're under a certain income.

Serious... I didn't know that. Maybe I should move out to the East.

[PC-stuff]

Serious... I didn't know that. Maybe I should move out to the East.

The credit is only if your income is low and the $ are not much.
If you want to save tax $, better to go to Alberta where there is no PST
,and gas is cheaper too.

[jande9]

If this is your home, be very careful about renting part of it out, as you may jeopardize your capital gains exemption on selling your personal home.

Here is what the government says on its website (http://www.cra-arc.gc.ca/E/pub/tg/t4036/t4036-e.html) .


You are usually considered to have changed the use of part of your principal residence when you start to use that part for rental purposes. However, you are not considered to have changed its use if:

the part you use for rental purposes is small in relation to the whole property; (my emphasis)
you do not make any structural changes to the property to make it more suitable for rental purposes; and
you do not deduct any CCA on the part you are using for rental purposes.
If you meet all the above conditions, the whole property may qualify as your principal residence even though you are using part of it for rental purposes.

However, if you do not meet all of the above conditions, when you sell or change the use of the property, you have to:

split the selling price between the part you used for your principal residence and the part you used for rental purposes by using either square metres or the number of rooms, as long as the split is reasonable; and
report any capital gain on the part you used for rental purposes. You do not have to report any capital gain for the part you used for your principal residence

I have been in this situation and the figure quoted to me by the tax advisor was 40%. Do not rent out over 40% of the floor area of your house or you will lose part of your tax exemption.
Also, don't claim depreciation on the part being rented out.

By the way, you can deduct a percentage of your mortgage interest, equivalent to the percentage of your property being rented out. You can't deduct any repayment of the principle though.

[grant]

Definitely. If you're claiming expenses, you better claim the income. But if my tenant doesn't claim the rent he's paying, I don't have to worry right? I mean, that is up to him (whether to file or not).

I must be missing the point here. You asked:

Would it be a problem if you never issued receipts for your tenants?

I took this to mean:

Would it be a problem [that i don't declare my rental income] if I never issued receipts to my tenants? [because then there is no proof i received the income].

Perhaps did you mean:

Would it be a problem [that] I never issued receipts to my tenants? [because I have an obligation as a landlord to give them].

If your question really is the former, i think it's extremely foolish to claim deductions without the corresponding income. That is tax evasion.

If your question is the latter, in BC there is no legal obligation i'm aware of to provide unsolicited receipts but if you deal in cash it will save you troubles later on.... plus a tenant who gives cash without demanding a receipt is a dumbass.

Re, % rental: you can rent the MAJORITY of your property without losing capital gains exemption. In the Fedel Saccomano case, he kept his exemption after renting 3 of the 4 units in his quadplex (75%). So don't worry about it.

[wrx2k3]

I must be missing the point here.

If your question really is the former, i think it's extremely foolish to claim deductions without the corresponding income. That is tax evasion.

If your question is the latter, in BC there is no legal obligation i'm aware of to provide unsolicited receipts but if you deal in cash it will save you troubles later on.... plus a tenant who gives cash without demanding a receipt is a dumbass.

Re, % rental: you can rent the MAJORITY of your property without losing capital gains exemption. In the Fedel Saccomano case, he kept his exemption after renting 3 of the 4 units in his quadplex (75%). So don't worry about it.

Grant, I meant the latter comment. So from what I gather, after reading all the replies is... there is a total of 2 bodies living in my house, myself and a tenant. I should claim my rental income and claim only 50% of the utilities and maintenance.