Thanks for the informative video. One aspect of deductions against rental income vs. CCA you may wish to produce a new video on is whether furnishing a rental space with new furniture to produce more rental income should be declared as a rental income expense or as CCA. The T776 form is somewhat ambiguous as it doesn't include a deduction for furnishing expenses, even though those expenses would increase the taxable rental income in future years.
Thanks for the detailed information, really appreciate it! I had a question about our long term rental that we have rented out as fully furnished because we rent to students. Can you claim the furniture as an expense? If so, is this considered CCA or does is it a tax deduction and then what category do you list it on the T776 form? Thanks Heather
Hi there my rental home had a leak from outside Deck and it had damaged the walls in the home which had to be removed and rebuilt. Tenants had been in home for two years before and two years after repairs. The carpet also had to be replaced. Should I have claimed as repairs or Is it a capital expense? Many thanks
Hi Cherry, thank you for the wonderful tips! What else included in the CCA rental property calculation beside the purchased price? How to manually calculate CCA for a rental property for year 3 if CCA is not done for the past 2 years. Really appreciate your feedback. Cheers!
Cherry Thanks for sharing the information specific to Real Estate investors and owners of rental income properties. We’re in Ottawa and own a mixed use 4-unit property and need to restructure Ops and Holdings corps. We received bad advice unfortunately from the start so trying to have a consultation to setup things properly now and someone to run our annual HST and Tax returns if you can recommend
@@jannellebritto938 Replacing a washing machine in your rental property is generally considered a repair expense and can be deducted in full from your rental income in the year you replaced it. Here's why: Repair vs. Capital Improvement: Repairs are meant to maintain the property's existing condition, while capital improvements enhance the property's value, lifespan, or functionality. Expectation of Replacement: Washing machines are expected to wear out and be replaced over time. The cost to replace them is considered a normal upkeep expense. CRA Thresholds: The CRA allows for a full deduction of repair costs under a certain dollar amount (which may vary depending on your location). Therefore, replacing the washing machine falls under the category of a deductible repair expense. There's no need to capitalize it and depreciate it over time.
If I have HELOC on rental property and used some part of heloc for repairs for rental. Can I claim heloc interest as well as repair as current expenses.
Great video! What happens if I am forced into doing an upgrade from a repair?-- I recently had to replace a broken old furnace (low efficiency) with a brand new High efficiency furnace, the old low efficiency stuff is not available anymore. --Or -- in another case I was forced to replace my roof with a different material (Originally Tar+Gravel, now shingles), due to the fact that in my area they no longer do Tar+gravel roofs if there is a slope.
Those would be considered as Capital Improvements due to the endearing benefit they provide to the property. To be considered a repair it would have to be something like replacing the motor or patching a section of the roof, outright replacement changes the treatment.
I am curious if home owner association fees can be dedicated with a garden suite? I view them like property taxes but just for the homes area. Thanks again for all the informative content!
When using your Loc for a Downpayment, what documentation do you need to prove to the CRA that it was actually used for the down payment? For example if the rental property was 100k, and I wanted to put 20k down toward the downpayment. If I used 5k from my LOC and transferred that to my savings that has 15k in it. How does the CRA know that I used my Loc for that 5k? If there is no real way of proving that, would that not be a red flag for the CRA to audit you?
Account statement and a cheque? You open a new account, transfer funds from LOC into that account, then issue a bank draft from that account and give it for downpayment. Now you have account statement, LOC statement, and copy of cheque for paper trail, done.
Hi Cherry, I currently have rental house and am about to put at offer on a 4 plex. I work a full time job making over 100k which I oay alot of income taxes. My question is once the deductible expenses are more then actual property taxe. Whit that being said, is there away to deduct some of these expenses on my jobs income taxe? I am also looking for a good accountant like yourself. I live in Quebec, Canada if that would work for you. Thanks alot for your video, very informative. Hope to talk soon
Generally speaking, cost of buying disability and illuness insurance isn't a tax deductible expense for real estate, unless the bank loan specifically requires you to have these purchased as part of their covenant.
Hi Cherry, Series 3 folio 7 of the taxfolio is greyed out and not accessible. Does this mean only pens, paper and etc are deductible as office expense and not the utilities, taxes, insurance like your video says? Did they change the rules for office expense since this video?
Hope this helps: www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-4-businesses/series-4-businesses-folio-2-deducting-business-expenses/income-tax-folio-s4-f2-c2-business-use-home-expenses.html#toc20
hi!! thanks for the video Cherry! One question... I was thinking of going to live to Canada. I dont know if this works like in the USA where you have passive income and active income and the deductions only apply to your passive income. Is that the same for Canada? or I can use this to lower my income taxes (wage ~ w2)
Not really sure I understand the US taxes that well, but the deductions are applied against the source of income first. Rental expenses are applied against the rental income first. If there's any net income, you get taxed on the net income. All the best to your move.
Hello Cherry, Thank you for your video. If you have multiple properties and want to deduct home office expense, does it matter which property you deduct office expense from?
If you are using your home office to manage the entire portfolio, the easiest would be deduct it amongst all your properties. If you are using your home office to manage only a couple out of many, then you just deduct it against the couple.
On my rental fridge & dishwasher broke down and have replaced but would like to know if this replacement considered as deduction that can be taken in a year or is it considered a deprecation? thank you.
Hi Cherry, if we use the HELOC balance on our rental property on our principal residence, will we be able to deduct the interest on that HELOC against the income on the rental property?
So just to clarify...if you legalized an existing suite and didn't have huge renovation expenses, would this be considered repair? And with respect to timing, if you wait until tenants have moved in and then replace the roof with something similar to what was there before, this is a repair?
Hi cherry Thanks for the awesome videos I purchased a prebuilt house to move in as my primary address My question is If I will do an assessment sale on this property and use the money I'll make to buy a house to be my primary residence, will I be exempt from paying tax Thank you 👍
I am a bit confused by your question. Assuming you have already moved into your pre construction home in Canada, and you ordinarily live in the property and meet all other criteria to claim it as your primary residence, when you sell the property, chances are, you can shelter the capital gain tax. Hope it helps.
Hi Cherry Thanks for all the great tax deduction tips. I have a question on primary residence exemption you mentioned in the video. I rented out to 3 students in my house. I take a room. Are there any exemptions? Thx
Primary exemption is only for capital gain. You would still be reporting income and expenses you collected from the students. Primary exemption is available to the portion that you occupy - for the portion that you don't occupy it really goes back to whether you are still using your property primarily for your primary residence - in your case it doesn't sound like it. So you will then have to prorate the portion for rental and calculate capital gain then
It really goes back to your situation - interest is tax deductible if you incur the loan for the purpose of earning rental income...and mortgage principle is not tax deductible
@@cynthiakurniawan9843 Income Tax Act specifies that you are eligible to deduct expenses for the purpose of earning a particular stream of income. Not sure if I am even answering your question. If you have more clarifying question, feel free to reach out to a qualified accountant. If you don't have one, our team is more than happy to assist you.
Hi Cherry - thanks for all the videos, I have watch all of them! If I recently purchased a property as a Principle residence (bought in March, closed in June), renovated it, and didn't start renting it out until September - what is the process of claiming a higher value for the home at the time the principle residence became a full rental property, vs. the original purchase price, as housing prices have significantly increased since the time of purchase and I would like to avoid as much capital gains in the future sale of the home as possible. Appreciate your help!
Hi Jeff, thanks for watching my video. This appears to be more complicated and very specific situation. I would advise you to speak to a licensed CPA or someone who know your situation better. If you're not currently working with an accountant, you can always setup a strategic consultation with our team to help you out.
Do you have a video on the pros and cons of purchasing a vacation (rental) property personally vs through a corporation? We are looking in Mexico and not which way would be more advantageous.
Your question is beyond just buying a vacation property, your question involves buying properties outside of Canada and the tax implication you might be exposed to as well. I will keep that in mind for future video production.
Very usefull video Cherry! At tip 5, only interest from a HELOC qualifies for deduction or it can be interest from the amount of a principal residence refinance used as downpayment for buying a rental property ? I think as long as keeping the ratio of the rental property downpayment amount to the total new refinanced mortgage amount the same during the principal residence refinanced mortgage life we should be fine with CRA!😎
Hi Dan, absolutely. As long as you are able to provide documentation and trace to the use of funds, you would be eligible to deduct the interest expense.
If I had a property manager and I still go out to visit my properties, I would still deduct my automobile expenses. Although the auto expenses could be way less...
Hi Joshua, going back to the general deductibility rule, you are eligible to deduct the equipment and its related expenses you incur for the purpose of maintaining your property. If you never had these equipment before, CRA may argue that you have to capitalize these assets and take 30% deduction on an annual basis, instead of a one time deduction write off.
Hi Cherry, thank you for posting a very informative video, this helps a lot. We will be purchasing our first home which is a condo and it has 2 rooms, we are planning to rent out the spare room since no one will be using it, can we claim a tax deduction for the expenses incurred by purchasing the bed, mattress, and other furniture on that room and for the dining and living room as well?
The key is to understand that CRA allows you to deduct reasonable expenses that you incur for the purpose of earning that particular income, with exceptions.. If you are renting out a portion of your home, only the expenses related to rental would be deductible.
Hi Cherry, thank you for all of these tips. I am a single rental owner trying to complete my taxes and I am confused about whether I can claim legal costs for closing on my rental home at time of purchase. If so where can I claim these costs?
Land transfer tax and closing costs are related to the purchase and so you can only add them to the cost of building. When you eventually sell, you can deduct that against the sale price.
Hi Cherry, I have a home loc with my primary residence and used it for a down payment for pre construction ( will complete in a few years) I am planning to sell my primary residence and buy a new place. Once I sold my primary residence the Home loc will be paid off and closed. If I set up a home loc in the new home, any way I can move previous borrowing to it so I can continue to borrow to invest for the pre construction? Or any other suggestions ? Thank you for your time 😊
Line of credit interest deduction is based on the direct use of funds. In a situation you described, you likely can lose the interest deductibility of the interest.
Your video is very informative. Thank you. I would appreciate If you could please answer a question: If I earn income from my 9 to 5 job and invest it to buy a commercial office space for rental purposes, can I deduct loan interests from my job income. Will this deduction change my marginal tax bracket?
You can deduct the interest on your loan, assuming that the loan is incurred to earn rental income from your commercial office space with some exception. If you have a loss, you will be able to offset your loss against your job income.
Hi Cherry, for travel expenses, do you need to track all expenses and prorate based on business and personal or can you simply pay yourself $0.50 per kilometer?
Hi Chuck, Thanks for reaching out! Every individuals situation is different. For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca
Hi Cherry, I bought a pre-construction as rental property from day1. Appliances were not provided by builder. So I added brand new appliances for this rental property. Can I deduct that cost of around 5-6k ?
Those appliance would be considered a capital expense not a current expense, you can claim CCA on those appliances each year and apply against the rental profit.
Hello Cherry, thank you for the very informative video. If you buy a property for cash for example 200K as a rental property, can you deduct the full 200K since it allows you earn income? Thank you!
Great question - cost of purchasing a property is not a tax deductible write off. You can deduct the wear and tear of the building - which is 4% on a declining basis, but not a one time write off especially if you are using it to earn rental income. On the other hand, if you are investing in flips, that can be a different story....
Hi Cherry, thanks for all the tips, learn alot. hoping this is something you can advise on, i recently bought a property, and looking for a tenant. For 2021 - if it remains vacant, can i still claim the expense deduction to 2021 tax year (but theres no income) -- how would that work?
Hi Vivian, Thanks for reaching out! I'm glad you find them helpful. For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca
Does this mean if I can deduct my maintenance fees and interest even if it cost more than what the rent is in order to create rental income? I.e mortgage P + I is 3k. Rent is 3k. But maintenance and property taxes are 1k. So 4k all together. Do I get a tax refund for the maintenance fees and property taxes. Do I also get a rebate for a portion of the interest on the mortgage?
@RealEstateTaxTips that part, I understand. But would I get a refund of the full amount of the property taxes and maintenance fees or just a portion like 25% Is there a number I can call to speak to someone to better explain it to me?
I’ve taken a flight from alberta to Toronto . I work from home remotely but have to come into the office one every few months- office is in Toronto . I also have a rental property in Toronto. Can I claim my flight and food expenses for rental or work related expenses . I’m an employee not a contractor
Hi Cherry, I enjoy all your income tax related videos. I have a question about CCA on an auto in a corporation. Usually, for individual or self employed CCA limit is $33900 for class 10.1. Does this apply to a corporation as well? Or a corporation can buy auto for a higher price and deduct 30% CCA on declining basis? This is a regular car not a Zero-emission. Please advice. Thanks
From a mortgage free primary house I borrowed 300k and Invested 260k on pre construction house. The new house which I intend to rent mortgage interest portion only is 7000 and the rent I get is 4000.can I claim the full interest paid 7000 as deductible. If my tax bracket is 40% can I get the refund of 33600 like this. 7000*12=84000*.40 =33600
What happens when we DO NOT use the capital depreciation yearly allowance as tax deduction for any of our rental properties? Also, do we have to show calculation of home value only for depreciation and figure our land value portion to calculate depreciate allowance? Thanks in advance!
There's a cost associating with filing amendment to claim CCA - and also other implication, opening up the previously filed years for audit, etc. The short answer is, you can, but there's cost and risk associated with doing so
Great content Cherry. I have a question: I am currently using a HELOC for the deposits of a purchase of a new build condo investment property. Closing will happen in 2025. Can I deduct since now the interest I am already paying on that HELOC? Thanks a lot in advance
You can deduct interest if you are incurring it to earn income - right now you aren't earning income. You can argue that it is part of the soft cost and add it to the cost of building and eventually you can deduct it against the sale price.
Yes, it is - the only thing that's different though is that you would have to exclude HST - you have to file a different HST form on HST collected and claimed the HST you paid. I'll create a video on just commercial properties in the future. Thanks for the ideas.
@@RealEstateTaxTips Omg I am so excited to hear that !!! And thanks for your comment! I will look forward to watching about Commercial rental tax Thanks Cherry as always 😘
Hi there! If you live in a duplex and rent the basemen apartment and you replace a roof or replace concrete walkway in backyard, while you have a tenant, can you deduct the full amount of the repair? Or only a percentage? What would that percentage be?
Hi Michelle, thanks for being here. Unfortunately this isn't the right platform where I would be able to advise you about your personalized situation. For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca and we will be sure to take care of you. Thanks!
I don't have an official office for my business, and so my home office is considered my office. Is the mileage used from my house to the rental property, or my home office to home depot (getting filters for the rental property) considered all for work?
If you manage the properties yourself, the mileage from your home to get filter is typically considered business use mileage and should be deductible against your rental property income - and the rental property must NOT be your own basement.
Hi Cherry, I bought a new house and put old house on rent. My new house is my primary residence. Since owning the new house enables me to earn rental income on other house, shouldn’t I be able to deduct mortgage interest on new house from taxes? Thanks
I have 3 properties, I regularly visit my properties for collecting rent and repairs, how can I calculate the travel expenses if I don't have a log book? Please give me all options. Thank you in advance.
Firstly you should always have a mileage log, there are apps for that. CRA requires that you keep detail logs of your expenses incurred to use towards the allowable deduction for your personal vehicle. Some people like to utilize the prescribed mileage rate and google but CRA does not have to accept this for individuals and you could lose the deduction if it is reviewed.
Hi Cherry, I bought my first property last year with my partner and it’s a 50% rental and 50% Owner occupied. I’m confused about the taxes in this case. Do I use 100% rental income & expenses on my tax.
If you bought it together 50/50 and intend to have all the income earned 50/50, then you and your partner would report it 50/50 between the two of you. If it is 50% used for rental, then only 50% of the expenses can be tax deductible.
@@RealEstateTaxTips I think the question is when you are doing your taxes with software, it asks you the property income and expenses.... I found out through much hassle that you need to put 100% of the income and expenses and then the software will automatically reduce that to your proportional ownership. So if you own 50% you still put in 100% of the income and expenses into the software.
If you have a property manager, depending on the extent of work being done by property manager, you may or may not be able to deduct the home office expense.
Depending on the type of Keyspire membership you're referring to, some are easier than the other for deduction purpose. I mentioned it in the past that the faster you take action after taking the course, the easier it is for you to claim the deduction. At the same time, it depends on the type of income you are reporting as well. Typically in Canada, it takes a few years to stablize a rental property. Even if you take action, you might not have sufficient amount of income to offset against the large amount of coaching/membership fees you incur with certain organization. Deducting them against minimal rental income may trigger an audit. Again, it's best to consult with a professional accountant before you file your return to understand your risk and benefits.
I have a principal resident that is paid off in full. If I wanted to refinance my principal resident and use that money for a down payment for a rental property. Can I deduct the interest from my principal interest and the rental property interest?
@@RealEstateTaxTips Hi Cherry, my scenario is different from the video. I currently have no mortgage on my principal resident and I’m planning to refinance my property to get funds $250k. The $250k will be used to purchase a rental income property as down payments/ land transfer tax. Can I deduct the interest on this mortgage from my principal resident and the mortgage on my rental property?
Assuming a mortgage is really a brand new mortgage in your own name. If you pay mortgage insurance then yes you can deduct it assuming you incur the insurance for a rental. If you didn’t incur it then you wouldn’t have the support or the right to claim it unfortunately
Are you asking if you will get a refund? This all goes back to how much rent you're receiving vs how much tax you have paid as well. If you have never paid any taxes and incurred large amount of deductible rental expenses, you are not eligible to "get any refund" ...since you've never paid. If you paid taxes and have legitimate losses, you may be able to get a portion of your taxes back.
Hi Cherry thanks for all your videos that have been very informative. I bought your book and bookkeeping tools and found it very helpful! For home office expense, can I deduct this for both my rental property and for home office use as an employee of a company? Or does it need to be one or the other / prorated? Thanks!
Haha, such a loaded question. Using the principles that I explain in the video, you need to be able to establish the cause and effect relationship. If you are applying the knowledge to understand real estate taxes, and you are also earning real estate income, I would argue that you can deduct it as office expense. If you don't even have a real estate business to begin with, it would be hard to deduct it as tuition.
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You are just killing it with your content. Not some click bait videos i see all the time. Thank you
Thanks for the informative video.
One aspect of deductions against rental income vs. CCA you may wish to produce a new video on is whether furnishing a rental space with new furniture to produce more rental income should be declared as a rental income expense or as CCA. The T776 form is somewhat ambiguous as it doesn't include a deduction for furnishing expenses, even though those expenses would increase the taxable rental income in future years.
We are 1st year garden suite owners and your videos are amazing! Thank you for this channel!
Glad you find my videos helpful!
Thanks for the detailed information, really appreciate it! I had a question about our long term rental that we have rented out as fully furnished because we rent to students. Can you claim the furniture as an expense? If so, is this considered CCA or does is it a tax deduction and then what category do you list it on the T776 form? Thanks Heather
Thank you Cherry for this- for sharing your knowledge with us. Do not put tape over a receipt, as this will erase it completely.
thank you so much more making this video. i learned lots and will be applying these deductions to my rental property
Glad it was helpful!
Wow. Very useful tips well summarized!
Thanks for the comment!
Hi there my rental home had a leak from outside
Deck and it had damaged the walls in the home which had to be removed and rebuilt.
Tenants had been in home for two years before and two years after repairs. The carpet also had to be replaced. Should I have claimed as repairs or
Is it a capital expense? Many thanks
Hi Cherry, thank you for the wonderful tips! What else included in the CCA rental property calculation beside the purchased price? How to manually calculate CCA for a rental property for year 3 if CCA is not done for the past 2 years. Really appreciate your feedback. Cheers!
Very valuable, thanks Cherry
Glad it was helpful!
You are sounding very knowledgeable. Love your channel
I appreciate that!
You're very knowledgable Cherry
Thanks!
A new furnace for a rental property can either be deducted as CCA or a capitol Expense but not both?
Hello Good day
Can i ask you some questions about the deductions for filing tax on real state income.
Pls .
Im from quebec..
Thank you
Such valuable information! Thank you! I love your channel and so glad I found you.
Glad you found the info useful. Thanks!
Can we deduct life or disability insurance premiums on investment property mortgage as expenses? Thank you
Cherry
Thanks for sharing the information specific to Real Estate investors and owners of rental income properties.
We’re in Ottawa and own a mixed use 4-unit property and need to restructure Ops and Holdings corps. We received bad advice unfortunately from the start so trying to have a consultation to setup things properly now and someone to run our annual HST and Tax returns if you can recommend
We work with investors from around the country. Feel free to connect with us at 416-548-4228
This is great! Thank you. I had to replace a washing machine while the property was tenant occupied. Thoughts on Capitalizing vs. Expensing?
Did you get an answer on this? I had the same question
@@jannellebritto938 Replacing a washing machine in your rental property is generally considered a repair expense and can be deducted in full from your rental income in the year you replaced it. Here's why:
Repair vs. Capital Improvement: Repairs are meant to maintain the property's existing condition, while capital improvements enhance the property's value, lifespan, or functionality.
Expectation of Replacement: Washing machines are expected to wear out and be replaced over time. The cost to replace them is considered a normal upkeep expense.
CRA Thresholds: The CRA allows for a full deduction of repair costs under a certain dollar amount (which may vary depending on your location).
Therefore, replacing the washing machine falls under the category of a deductible repair expense. There's no need to capitalize it and depreciate it over time.
If I have HELOC on rental property and used some part of heloc for repairs for rental. Can I claim heloc interest as well as repair as current expenses.
Very informative. Thank you Cherry!
Glad it was helpful!
Great video! Thanks for all the tips 👍
Glad you find it useful
Very informative for a beginner like me. Thank you Cherry.
Glad it was helpful!
Thanks again, excellent explanations.
The water heater tank is leaking and the plumber said it has to be replaced. Can I claim it as an expense?
Great video! What happens if I am forced into doing an upgrade from a repair?-- I recently had to replace a broken old furnace (low efficiency) with a brand new High efficiency furnace, the old low efficiency stuff is not available anymore. --Or -- in another case I was forced to replace my roof with a different material (Originally Tar+Gravel, now shingles), due to the fact that in my area they no longer do Tar+gravel roofs if there is a slope.
Those would be considered as Capital Improvements due to the endearing benefit they provide to the property. To be considered a repair it would have to be something like replacing the motor or patching a section of the roof, outright replacement changes the treatment.
Can you recommend a tax accountant who is versed in Real Estate rentals in Vancouver?
I am curious if home owner association fees can be dedicated with a garden suite? I view them like property taxes but just for the homes area. Thanks again for all the informative content!
Yes a portion of the fees would be considered deductible
Thank you very much for information. Can I claim new appliances? The old ones broke and I had to purchase new ones.
New appliances are considered a capital item to be depreciated over their useful life as they have an "endearing benefit"
@@RealEstateTaxTips Thank you very much! Does these come under "Class 8 - 20% depreciation per year" class?
Excellent video... I learned about 6 new tips!
Glad it was helpful!
When using your Loc for a Downpayment, what documentation do you need to prove to the CRA that it was actually used for the down payment? For example if the rental property was 100k, and I wanted to put 20k down toward the downpayment. If I used 5k from my LOC and transferred that to my savings that has 15k in it. How does the CRA know that I used my Loc for that 5k? If there is no real way of proving that, would that not be a red flag for the CRA to audit you?
Account statement and a cheque? You open a new account, transfer funds from LOC into that account, then issue a bank draft from that account and give it for downpayment. Now you have account statement, LOC statement, and copy of cheque for paper trail, done.
Hi Cherry,
I currently have rental house and am about to put at offer on a 4 plex. I work a full time job making over 100k which I oay alot of income taxes.
My question is once the deductible expenses are more then actual property taxe. Whit that being said, is there away to deduct some of these expenses on my jobs income taxe?
I am also looking for a good accountant like yourself. I live in Quebec, Canada if that would work for you.
Thanks alot for your video, very informative.
Hope to talk soon
Are condo special levies tax deductible? Thanks!
Depending on the underlying reason for the special levies - if it is for repair, I would argue that it is deductible...
How about the cost of buying disability, illness insurance for the mortgage? Can they also be deducted? Thanks.
Generally speaking, cost of buying disability and illuness insurance isn't a tax deductible expense for real estate, unless the bank loan specifically requires you to have these purchased as part of their covenant.
Can I just google the distance from home to rental property and multiply by the mileage rate allowable in the year? Let’s say I only took two trips.
Did you get an answer on this ? I had the same question
Hi Cherry, Series 3 folio 7 of the taxfolio is greyed out and not accessible. Does this mean only pens, paper and etc are deductible as office expense and not the utilities, taxes, insurance like your video says? Did they change the rules for office expense since this video?
Hope this helps:
www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-folios-index/series-4-businesses/series-4-businesses-folio-2-deducting-business-expenses/income-tax-folio-s4-f2-c2-business-use-home-expenses.html#toc20
hi!! thanks for the video Cherry! One question... I was thinking of going to live to Canada. I dont know if this works like in the USA where you have passive income and active income and the deductions only apply to your passive income. Is that the same for Canada? or I can use this to lower my income taxes (wage ~ w2)
Not really sure I understand the US taxes that well, but the deductions are applied against the source of income first. Rental expenses are applied against the rental income first. If there's any net income, you get taxed on the net income.
All the best to your move.
Great video. Thank you, Cherry.
Thanks for watching!
Hello Cherry, Thank you for your video. If you have multiple properties and want to deduct home office expense, does it matter which property you deduct office expense from?
If you are using your home office to manage the entire portfolio, the easiest would be deduct it amongst all your properties. If you are using your home office to manage only a couple out of many, then you just deduct it against the couple.
On my rental fridge & dishwasher broke down and have replaced but would like to know if this replacement considered as deduction that can be taken in a year or is it considered a deprecation? thank you.
The new appliance is considered a capital asset to be depreciated over the useful life of the appliance
Hi Cherry, if we use the HELOC balance on our rental property on our principal residence, will we be able to deduct the interest on that HELOC against the income on the rental property?
If the loan is incurred for the purpose of earning rental income, yes the interest on your loan can be deductible.
So just to clarify...if you legalized an existing suite and didn't have huge renovation expenses, would this be considered repair? And with respect to timing, if you wait until tenants have moved in and then replace the roof with something similar to what was there before, this is a repair?
Hi cherry
Thanks for the awesome videos
I purchased a prebuilt house to move in as my primary address
My question is
If I will do an assessment sale on this property and use the money I'll make to buy a house to be my primary residence, will I be exempt from paying tax
Thank you 👍
I am a bit confused by your question. Assuming you have already moved into your pre construction home in Canada, and you ordinarily live in the property and meet all other criteria to claim it as your primary residence, when you sell the property, chances are, you can shelter the capital gain tax. Hope it helps.
Hi Cherry
Thanks for all the great tax deduction tips.
I have a question on primary residence exemption you mentioned in the video. I rented out to 3 students in my house. I take a room. Are there any exemptions?
Thx
Primary exemption is only for capital gain. You would still be reporting income and expenses you collected from the students. Primary exemption is available to the portion that you occupy - for the portion that you don't occupy it really goes back to whether you are still using your property primarily for your primary residence - in your case it doesn't sound like it. So you will then have to prorate the portion for rental and calculate capital gain then
Will home office expense claim fir working from home will jeopardize your principle residence claim ?
Great video! Quick question the mortgage interest on rental property can I claim the entire amount or is it % of the interest? Thank you
It really goes back to your situation - interest is tax deductible if you incur the loan for the purpose of earning rental income...and mortgage principle is not tax deductible
Do you have to claim rental income in order to claim all the tax deductions for the property ?
@@cynthiakurniawan9843 Income Tax Act specifies that you are eligible to deduct expenses for the purpose of earning a particular stream of income. Not sure if I am even answering your question.
If you have more clarifying question, feel free to reach out to a qualified accountant. If you don't have one, our team is more than happy to assist you.
Hi Cherry - thanks for all the videos, I have watch all of them!
If I recently purchased a property as a Principle residence (bought in March, closed in June), renovated it, and didn't start renting it out until September - what is the process of claiming a higher value for the home at the time the principle residence became a full rental property, vs. the original purchase price, as housing prices have significantly increased since the time of purchase and I would like to avoid as much capital gains in the future sale of the home as possible. Appreciate your help!
Hi Jeff, thanks for watching my video.
This appears to be more complicated and very specific situation. I would advise you to speak to a licensed CPA or someone who know your situation better. If you're not currently working with an accountant, you can always setup a strategic consultation with our team to help you out.
Do you have a video on the pros and cons of purchasing a vacation (rental) property personally vs through a corporation? We are looking in Mexico and not which way would be more advantageous.
Your question is beyond just buying a vacation property, your question involves buying properties outside of Canada and the tax implication you might be exposed to as well.
I will keep that in mind for future video production.
Cherry can I rent an extra room in our condo without being audited?
Very usefull video Cherry! At tip 5, only interest from a HELOC qualifies for deduction or it can be interest from the amount of a principal residence refinance used as downpayment for buying a rental property ? I think as long as keeping the ratio of the rental property downpayment amount to the total new refinanced mortgage amount the same during the principal residence refinanced mortgage life we should be fine with CRA!😎
Hi Dan, absolutely. As long as you are able to provide documentation and trace to the use of funds, you would be eligible to deduct the interest expense.
Hi Chery,
Thanks for your videos. If you have a property manager can you still deduct auto expenses?
If I had a property manager and I still go out to visit my properties, I would still deduct my automobile expenses. Although the auto expenses could be way less...
@@RealEstateTaxTips Thank you
Can you claim expenses for equipment you use to maintain the property yourself. For example, lawn mower repairs, snow blower gasoline and oil?
Hi Joshua, going back to the general deductibility rule, you are eligible to deduct the equipment and its related expenses you incur for the purpose of maintaining your property.
If you never had these equipment before, CRA may argue that you have to capitalize these assets and take 30% deduction on an annual basis, instead of a one time deduction write off.
Hi Cherry, thank you for posting a very informative video, this helps a lot.
We will be purchasing our first home which is a condo and it has 2 rooms, we are planning to rent out the spare room since no one will be using it, can we claim a tax deduction for the expenses incurred by purchasing the bed, mattress, and other furniture on that room and for the dining and living room as well?
The key is to understand that CRA allows you to deduct reasonable expenses that you incur for the purpose of earning that particular income, with exceptions.. If you are renting out a portion of your home, only the expenses related to rental would be deductible.
@@RealEstateTaxTips Cool! Thank you for the tip, keep up with the good-quality videos.
Hi Cherry, thank you for all of these tips. I am a single rental owner trying to complete my taxes and I am confused about whether I can claim legal costs for closing on my rental home at time of purchase. If so where can I claim these costs?
Land transfer tax and closing costs are related to the purchase and so you can only add them to the cost of building. When you eventually sell, you can deduct that against the sale price.
Hi Cherry,
I have a home loc with my primary residence and used it for a down payment for pre construction ( will complete in a few years)
I am planning to sell my primary residence and buy a new place. Once I sold my primary residence the Home loc will be paid off and closed.
If I set up a home loc in the new home, any way I can move previous borrowing to it so I can continue to borrow to invest for the pre construction? Or any other suggestions ?
Thank you for your time 😊
Line of credit interest deduction is based on the direct use of funds. In a situation you described, you likely can lose the interest deductibility of the interest.
Your video is very informative. Thank you.
I would appreciate If you could please answer a question:
If I earn income from my 9 to 5 job and invest it to buy a commercial office space for rental purposes, can I deduct loan interests from my job income. Will this deduction change my marginal tax bracket?
You can deduct the interest on your loan, assuming that the loan is incurred to earn rental income from your commercial office space with some exception. If you have a loss, you will be able to offset your loss against your job income.
Hi Cherry, for travel expenses, do you need to track all expenses and prorate based on business and personal or can you simply pay yourself $0.50 per kilometer?
Hi Chuck, Thanks for reaching out! Every individuals situation is different.
For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca
great, thank you!
Would you be able to do a video about attribution rule? Thank you!!
The phone bill cost for an owner occupied property, is it 50% tax deductible or can it be 33% ? ( 3 unit owner occupied)........
Hi Cherry, I bought a pre-construction as rental property from day1. Appliances were not provided by builder. So I added brand new appliances for this rental property. Can I deduct that cost of around 5-6k ?
Those appliance would be considered a capital expense not a current expense, you can claim CCA on those appliances each year and apply against the rental profit.
I am thinking of buying a house with a rentable basement. Can i apply for this tax deductions?
Is legal basment rental development tax deductible
Hello Cherry, thank you for the very informative video. If you buy a property for cash for example 200K as a rental property, can you deduct the full 200K since it allows you earn income? Thank you!
Great question - cost of purchasing a property is not a tax deductible write off. You can deduct the wear and tear of the building - which is 4% on a declining basis, but not a one time write off especially if you are using it to earn rental income.
On the other hand, if you are investing in flips, that can be a different story....
Hi Cherry, thanks for all the tips, learn alot. hoping this is something you can advise on, i recently bought a property, and looking for a tenant. For 2021 - if it remains vacant, can i still claim the expense deduction to 2021 tax year (but theres no income) -- how would that work?
Hi Vivian,
Thanks for reaching out! I'm glad you find them helpful.
For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca
Does this mean if I can deduct my maintenance fees and interest even if it cost more than what the rent is in order to create rental income? I.e mortgage P + I is 3k. Rent is 3k. But maintenance and property taxes are 1k. So 4k all together. Do I get a tax refund for the maintenance fees and property taxes. Do I also get a rebate for a portion of the interest on the mortgage?
Principal repayment of your mortgage is non-deductible.
@RealEstateTaxTips that part, I understand. But would I get a refund of the full amount of the property taxes and maintenance fees or just a portion like 25%
Is there a number I can call to speak to someone to better explain it to me?
For expenses for airbnb rental property…. Cleaning supplies, garbage bags, couch, bed. What would those fall under?
You can create a category just called Cleaning supplies, you can also report them under Maintenance
Amazing video
Thanks!
I’ve taken a flight from alberta to Toronto . I work from home remotely but have to come into the office one every few months- office is in Toronto . I also have a rental property in Toronto. Can I claim my flight and food expenses for rental or work related expenses . I’m an employee not a contractor
Hi Cherry, I enjoy all your income tax related videos. I have a question about CCA on an auto in a corporation. Usually, for individual or self employed CCA limit is $33900 for class 10.1. Does this apply to a corporation as well? Or a corporation can buy auto for a higher price and deduct 30% CCA on declining basis? This is a regular car not a Zero-emission. Please advice. Thanks
Same applies to the corporation.
From a mortgage free primary house I borrowed 300k and Invested 260k on pre construction house. The new house which I intend to rent mortgage interest portion only is 7000 and the rent I get is 4000.can I claim the full interest paid 7000 as deductible. If my tax bracket is 40% can I get the refund of 33600 like this.
7000*12=84000*.40 =33600
What happens when we DO NOT use the capital depreciation yearly allowance as tax deduction for any of our rental properties? Also, do we have to show calculation of home value only for depreciation and figure our land value portion to calculate depreciate allowance? Thanks in advance!
It's an optional deduction, you don't need to claim it at all.
If you have not claimed capital cost allowance, can you retro claim from past years that I have owned?
There's a cost associating with filing amendment to claim CCA - and also other implication, opening up the previously filed years for audit, etc. The short answer is, you can, but there's cost and risk associated with doing so
Great content Cherry. I have a question: I am currently using a HELOC for the deposits of a purchase of a new build condo investment property. Closing will happen in 2025. Can I deduct since now the interest I am already paying on that HELOC? Thanks a lot in advance
You can deduct interest if you are incurring it to earn income - right now you aren't earning income. You can argue that it is part of the soft cost and add it to the cost of building and eventually you can deduct it against the sale price.
Do you take clients & how can I book a consultation?
Hi Mikayla, absolutely. You can reach out to our office at 416-548-4228 or email us at admin@cccpa.ca
For condo special levies, are they tax deductible?
Depending on the underlying reason for the special levies - if it is for repair, I would argue that it is deductible...
Should I claim the depreciation for my investment property?
There's no one size fits all solution. This video may provide you with better answer.
ruclips.net/video/Poq1_0F1Cpo/видео.html
Hi Cherry
Is this qualified for Commercial rental as well ? Thanks ❤
Yes, it is - the only thing that's different though is that you would have to exclude HST - you have to file a different HST form on HST collected and claimed the HST you paid. I'll create a video on just commercial properties in the future. Thanks for the ideas.
@@RealEstateTaxTips
Omg I am so excited to hear that !!!
And thanks for your comment!
I will look forward to watching about Commercial rental tax
Thanks Cherry as always 😘
Hi there! If you live in a duplex and rent the basemen apartment and you replace a roof or replace concrete walkway in backyard, while you have a tenant, can you deduct the full amount of the repair? Or only a percentage? What would that percentage be?
Typically you are only able to deduct the portion of expense you incur for the purpose of earning your rental income.
Hi, Are offering tax planning services ?I live in Toronto.
Hi. Yes we do. Please reach out to us at realestatetaxtips.ca/contact-us/ and we can guide you with the next steps. Thanks
Hi Cherry, Is the penalty for switching the mortgage tax deductible? Thank you
Hi Michelle, thanks for being here. Unfortunately this isn't the right platform where I would be able to advise you about your personalized situation. For any questions or consultation, please contact our office at 416-548-4228 or email us at admin@cccpa.ca and we will be sure to take care of you. Thanks!
I don't have an official office for my business, and so my home office is considered my office. Is the mileage used from my house to the rental property, or my home office to home depot (getting filters for the rental property) considered all for work?
If you manage the properties yourself, the mileage from your home to get filter is typically considered business use mileage and should be deductible against your rental property income - and the rental property must NOT be your own basement.
Hi Cherry, I bought a new house and put old house on rent. My new house is my primary residence. Since owning the new house enables me to earn rental income on other house, shouldn’t I be able to deduct mortgage interest on new house from taxes? Thanks
ruclips.net/video/iWURPZEBKsk/видео.html
I wish I were the one who wrote up the Income Tax Act. I'm just the messenger .
I have 3 properties, I regularly visit my properties for collecting rent and repairs, how can I calculate the travel expenses if I don't have a log book? Please give me all options. Thank you in advance.
Firstly you should always have a mileage log, there are apps for that. CRA requires that you keep detail logs of your expenses incurred to use towards the allowable deduction for your personal vehicle. Some people like to utilize the prescribed mileage rate and google but CRA does not have to accept this for individuals and you could lose the deduction if it is reviewed.
@@RealEstateTaxTips if I own my vehicle, besides mileage expenses, what else can I deduct under travel expenses? Thank you
Hi Cherry, I bought my first property last year with my partner and it’s a 50% rental and 50% Owner occupied. I’m confused about the taxes in this case. Do I use 100% rental income & expenses on my tax.
Good question, I'm wondering the same rhing
If you bought it together 50/50 and intend to have all the income earned 50/50, then you and your partner would report it 50/50 between the two of you. If it is 50% used for rental, then only 50% of the expenses can be tax deductible.
@@RealEstateTaxTips I think the question is when you are doing your taxes with software, it asks you the property income and expenses.... I found out through much hassle that you need to put 100% of the income and expenses and then the software will automatically reduce that to your proportional ownership. So if you own 50% you still put in 100% of the income and expenses into the software.
@@jeffsim4191 we always enter 100% of the income, so I kind of take it for granted.
HOW TO CLAIM RENTAL LOSSES FOR VACANT MONTHS WHEN THE PROPERTY IS NOT RENTED DUE TO NOT FINDING SUITABLE RENTERS?
If you have a property manager, can you still claim home office expenses?
If you have a property manager, depending on the extent of work being done by property manager, you may or may not be able to deduct the home office expense.
Sorry I’m new to this. I drive back to my rental income in north york from markham which is 20km how would I claim for gas? Like the ratio. Thank you
ruclips.net/video/8PsWQ1NeHgQ/видео.html
can I claim the Mortgage payment and Mortgage interest as expense on a rental income property?
If the loan is borrowed to earn investment income, then the answer is yes - you can deduct the mortgage interest. But not the mortgage payment
can I use my keyspire membership on my real estate investment?
Depending on the type of Keyspire membership you're referring to, some are easier than the other for deduction purpose. I mentioned it in the past that the faster you take action after taking the course, the easier it is for you to claim the deduction. At the same time, it depends on the type of income you are reporting as well. Typically in Canada, it takes a few years to stablize a rental property. Even if you take action, you might not have sufficient amount of income to offset against the large amount of coaching/membership fees you incur with certain organization. Deducting them against minimal rental income may trigger an audit.
Again, it's best to consult with a professional accountant before you file your return to understand your risk and benefits.
Can we deduct CCA for appliances?
Absolutely you can claim CCA for appliances
My condo fees just automatically deducted from my bank. I don’t think condo gives me receipts for this. Do you ask for each month? Or each year?
Every year your condo board would give you notice for rate increase - that notice would be sufficient proof to CRA.
I have a principal resident that is paid off in full. If I wanted to refinance my principal resident and use that money for a down payment for a rental property. Can I deduct the interest from my principal interest and the rental property interest?
ruclips.net/video/iWURPZEBKsk/видео.html
This video may help you understand it a bit better
@@RealEstateTaxTips Hi Cherry, my scenario is different from the video. I currently have no mortgage on my principal resident and I’m planning to refinance my property to get funds $250k. The $250k will be used to purchase a rental income property as down payments/ land transfer tax. Can I deduct the interest on this mortgage from my principal resident and the mortgage on my rental property?
If I am assuming a Mortgage that was insured, less than 5% down can I write off the finance charge?
Assuming a mortgage is really a brand new mortgage in your own name. If you pay mortgage insurance then yes you can deduct it assuming you incur the insurance for a rental. If you didn’t incur it then you wouldn’t have the support or the right to claim it unfortunately
I have a condo as a rental income property in Ontario. Can I deduct condo management fees?
Sure...as long as it is incurred for the purpose of earning the rental income
at what percentage do you get back vs what you put out?
Are you asking if you will get a refund? This all goes back to how much rent you're receiving vs how much tax you have paid as well.
If you have never paid any taxes and incurred large amount of deductible rental expenses, you are not eligible to "get any refund" ...since you've never paid.
If you paid taxes and have legitimate losses, you may be able to get a portion of your taxes back.
Can i deduct the lawyers fee when we bought our rental property?
Yes and no. You can't deduct it as a current expense, but you can deduct it as part of adjust cost base when you sell your property
@@RealEstateTaxTips thank you
Hello do you have a video showing how to deduct interest of mortgage on rental income? Do you have example?
I borrow the money for preconstruction appartment building will complete 2026.can I write off interest rate.
The interest would be considered a "Soft Cost" and added to you purchase price
Hi Cherry thanks for all your videos that have been very informative. I bought your book and bookkeeping tools and found it very helpful!
For home office expense, can I deduct this for both my rental property and for home office use as an employee of a company? Or does it need to be one or the other / prorated? Thanks!
Home office expenses must be handled with care. Sometimes it may jeopardize your claim on primary residence exemption.
Hi Cherry, is buying your book considered deductible as education expenses? :)
Haha, such a loaded question. Using the principles that I explain in the video, you need to be able to establish the cause and effect relationship. If you are applying the knowledge to understand real estate taxes, and you are also earning real estate income, I would argue that you can deduct it as office expense. If you don't even have a real estate business to begin with, it would be hard to deduct it as tuition.
@@RealEstateTaxTips Thank you for the reply 😊. I bought your book and came across this video. Will definitely claim it against my rental income.
I think i just bought your book =))
Thank you!
Honestly, Thank you for sharing your wealth of knowledge. Will get in touch soon.
Is land transfer a deduction?..
Land transfer tax is calculated as part of adjust cost base...you can deduct it when you sell the property
Hi, Cherry. Can we hire and pay my kid to work on my rental property management and expense it as cost of my rental property? Thanks
Of course provided that they do actually management your properties and they should also report their PM fees as income