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Email this2:46 pm
December 1, 2017
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Hi,
If I have a rental property where I rent out the main floor and basement suites, can I claim a home office for tax write off purposes in my primary residence?
Also, if my rental property was my primary residence when I first bought it (ie: I lived in one suite and rented out the other) from 2014 to 2018 and then in 2018 I moved to a new house that became my primary residence and I kept the original house, but rented out the entire house, how does this affect my taxes in terms of capital gains if I were to sell the rental property for a gain in say 2025?
Thanks for the feedback!
11:52 am
January 10, 2018
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I think the questions that you are asking regarding rental property are beyond the knowledge of most forum member, however, it is good that you recognize that you are needing tax advice... i.e. tax planning advice.
This article may help get you started:
http://www.moneysense.ca/spend.....tax-rules/
You can do it alone but another option is to see a tax accountant who will provide guidance - what are the main tax rules you need to comply with, options to minimize tax, and what problems to avoid.
To reduce your costs, it is best to spend a hour or two of your own time carefully documenting ALL of the information on one sheet of paper, (For each tax year: actual & estimated property values, rent incomes, itemized rent expenses, size of rental vs principal [eg rental 600 sq ft of 2000 sq ft total] etc. ) and then book a 30 minute appointment for a tax review. Ask for their hourly rate before you book.
Best of luck !
Wayno
12:11 pm
September 11, 2013
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shadys, I'm sure you can google as well as me but here are a couple of links with some info to get you going:
1:45 pm
October 22, 2018
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Regarding writing off home office expense, business use of your house is allowed when you have a business such as property management ...
When you moved out of your house in 2018 you have what is called a "change of use" and you need to protect any principal resident gain - which is tax free. This can be accomplished by having a realtor write you up a fair market value of your residence at the date you moved out. Normally realtors provide an opinion letter based on the market value of similar residences that sold.
When you sell in 2025, the gain will be the difference between what you sold it for and what it's market value was when you moved out and based on the opinion letter you obtained in 2018.
Hope that helps!
8:41 pm
April 6, 2013
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Surprisingly, property rental is not always a business for tax purposes.
One will need to determine whether one has an investment or an actual business. See Chapter 1 of T4036 Rental Income Guide:
Do you have rental income or business income?
To determine whether your rental income is from property or business, consider the number and types of services you provide for your tenants.
In most cases, you are earning an income from your property if you rent space and provide basic services only. Basic services include heat, light, parking, and laundry facilities. If you provide additional services to tenants, such as cleaning, security, and meals, you may be carrying on a business. The more services you provide, the greater the chance that your rental operation is a business.
For more information about how to determine if your rental income comes from property or a business, see archived Interpretation Bulletin IT-434, Rental of Real Property by Individual, and its Special Release.
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When there is not a business, one cannot claim the home office deduction. It won't be a business if one is reporting the net rental income on line 126.
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