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There are many reasons why people might have rental property according to Edmonton bookkeeping. And regardless of the reason why someone is renting out property. Whether it is home that they own or a room that they are renting out. There are many questions that need to be answered when it comes to filling out their taxes properly.

One of the most common questions that Edmonton bookkeeping gifts. Is if rental income is considered personal income, or business income. And as long as they are just charging for rent for the home or the room. That will be considered a personal rental income.

However, once a person starts providing any other additional services included in that rent. Such as cleaning the house, providing meals, or landscaping and shoveling the walk for example. This can then be considered business income according to the Canada revenue agency.

If it is considered business income, people will not have to start filling out their personal tax return as a sole proprietor. And nor will they have to incorporate in order to start claiming that income. It just means that they will also have to fill out a form called a T2125 along with their personal tax return to claim that business income.

If people are renting out a room. They need to know that when it comes to claiming expenses. They need to ensure that they are claiming a percentage and not all of the expenses. Such as a third of all of the expenses or quarter of all of the expenses.

Because if they go over 50% of the expenses. Then they will lose their principal deduction. Many people calculate the percentage of the home that the room takes up. And then claim that percentage on all of the expenses.

When it comes to claiming expenses. There are a lot of rules that must be followed. Therefore it is very important for people to understand which expenses they can claim. And which ones they cannot. Or simply let their Edmonton bookkeeping company take care of their tax return for them. Avoid making any costly errors.

For example, while office expenses are allowed to be claimed. This is only on certain things such as office supplies. If it is considered a capital expense. This is not claimable on their taxes as a rental expense.

And what would be considered a capital expense according to the Canada revenue agency? Is anything that lasts longer than a year. So they will be able to claim expenses like pens, paper and Staples. A person may not claim things such as the stapler itself, calculator or a chair for example.

If a person has any type of rental income. Whether it is from an entire property that they are renting out. Or just a room in their home. They will be able to claim rental expenses.

As long as they are porting their rental income properly on their personal tax return. And then being very careful to ensure that they are claiming those expenses properly at all times.

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There are many questions that people have for their Edmonton bookkeeping company the first tax return after buying a property to rent out.

A lot of these questions are about what expenses they can claim on their tax return. That they have incurred from managing and maintaining their rental property. There are a lot of rules that must be followed. Therefore, having an Edmonton bookkeeping company that can help answer their questions is extremely important.

While people are allowed to deduct advertising expenses when looking for a renter. They must ensure that all of the methods that they used to advertise our Canadians. Including newspapers, radio, and television. And even online advertising. As long as they are ensuring that it is Canadian companies. That can be claimed.

Insurance is another expense that can be claimed. But a person will only be able to claim the insurance premiums for the current year. And since it is quite common for insurance policies to span more than one year. People need to ensure that they are only claiming the portion of their insurance premiums for the current year.

Many people also want to know if they can do doctor management and administration fees for managing the property. And while the answer to this question is yes, it only applies if it fees to another person or another company that manages the property.

So if a person is managing the property themselves. They cannot charge an hourly fee as an expense on their personal taxes.

The same is true if people are doing repairs and maintenance. They can claim the cost of the repairs. Including labour. Unless they are providing the labour themselves.

However, when it does come to deducting the cost of repairs and maintenance. They also cannot include capital costs here as well.

For example, a person can fix the flooring, patch a hole in the roof, and paint their property. But if they need to buy a new appliance. That would be considered a capital cost. Because it improves the value of their rental property.

And anything that improves or extends the life of the property. Must be then claimed as an increase to the overall value of the building. And not under expenses.

If a person has hired someone like at manager to help manage the property. Maintenance personnel to do repairs on the property. Or even someone to help find renters. Not only are there expenses deductible. But they can also deduct their benefits as long as they are working for the homeowner on an ongoing basis.

With all of the exceptions to the various expenses that they can claim. It may be very difficult for a person to understand what will count as it expenses that they can deduct or not. Which is why they should hire and Edmonton bookkeeping company.

That will be able to ensure that they claim all of the expenses properly. So that a person does not end up getting audited by the Canada revenue agency unexpectedly.