People who own properties and rent them out can claim this income personally says Edmonton bookkeeping. As long as the property owners are simply charging rent for the space and nothing else.
They may include things in that rent such as the cost of the utilities. However, if people start providing any additional services such as cleaning the house, or providing meals to the renters. Especially if they are renting a room in the house. This is no longer considered personal income.
So for person owns when rental property, multiple or even renting out a room in their home. If they are claiming this income on their personal tax return. Edmonton bookkeeping says they can also claim the expenses they incur. Maintaining their rental properties and spaces on their tax return as well.
There is many different expenses that can be claimed, however there are also many exceptions that must be adhered to. Based on Canada revenue agency’s rules and regulations. Therefore, if people do have rental properties. And are planning on claiming expenses. Should familiarize themselves with the rules.
For example, many people want to know if they are able to deduct their insurance that they have on their rental property. And while the answer to this question is yes, they need to be very careful in how they claimant. Because many insurance policies cover multiple years.
Therefore, a property owner needs to be very careful that they are only claiming the percentage of that policy for that year. Then also remember to carry the rest of it forward to be claimed in the following year.
It may be necessary for property owner to advertise in order to find a renter for their space. And whether they hire a broker and pay them a finders fee. Or if they have advertised in the newspaper, on the radio or on a website. These are expenses that can be deducted. As long as they are advertising through Canadian channels.
People might even needs to have a management company help maintain the rental property. Whether it is through repairs and maintenance, collecting rent or managing the property. Whether they have hired a company, or an individual to do this. This can be claimed as an expense as well.
Particularly if a property owner has multiple properties. And have management or maintenance personnel working for them on an ongoing basis. Not only can their salary or wages be claimed as an expense. But also benefits that the property owner might extend to them. Can be deducted as an expense as well.
The exception to this rule, is if a property owner is providing labour for the rental property themselves. Whether it is finding mentors, managing the property or doing repairs and maintenance themselves. Their own labour cannot be claimed as a rental expense on their taxes.
By learning all of these exceptions says Edmonton bookkeeping. Can help ensure that people who own rental property will not make mistakes on their personal taxes. Allowing them to minimize taxes that they own is much as possible.
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It is very important for people to minimize the taxes that they pay on their tax return says Edmonton bookkeeping. Especially because according to the Fraser Institute, the average Canadian pays approximately 43% of their entire income on a variety of taxes.
These taxes can include things such as GST and fuel taxes. But also include things like their income tax, CPP and EI. Therefore, many people want to know exactly what expenses they can claim on their personal tax return. The can help minimize these taxes that they owe.
If they have until income, they can claim a wide variety of expenses on their tax return. However, there are several exceptions and rules to follow in order to claim those amounts. People might find it especially beneficial to either contact and Edmonton bookkeeping company to learn what exceptions there are.
Or even hiring a bookkeeper to take care of their tax return at the end of the year. So that they do not and making mistakes that could end being more costly in the long run.
For example, people might have office expenses that they incur for managing their rental properties. And while Canada revenue agency allows office expenses to be deducted as an expense. The exclusion here is not capital expenditures.
Canada revenue agency considers anything capital expenditure, if it has a useful life longer than a year. So while they can claim things like pens, highlighters, Post-it notes and paper. They will not be able to claim things such as a calculator, or the stapler they purchase. And especially things like desks, filing cabinets and chairs cannot be claimed.
People also wonder about their property taxes. And while they are allowed to claim the property tax on their rental space as an expense. If there unit has not been rented out the entire year. They can only claim the property taxes for the percentage of the year that there space has been occupied.
Even utilities can be deducted. As long as the owner has specified in the rental agreement that the property owner pays for the utilities. And while many people think of utilities as gas, oil, electricity and water.
A property owner can even include things such as cable, Internet and a landline phone. And as long as they have specified in the rental agreement that those would be included in the utilities that is the property owner pays. They can deduct those bills as a rental expense on their personal tax return as well.
Even if a person is renting out a room or two in their home. They can claim these utilities. But only a percentage of them. And regardless of what percentage they use, they need to ensure that it is under 50% says Edmonton bookkeeping. Or else the property owner will lose the principal deduction on their tax return.
By learning the exceptions to the rental expenses that they can claim. Can help ensure that property owners are able to claim their rental income, and their expenses properly. So that they can minimize their taxes as much as possible.