Since the average Canadian pays 43% of their total income in taxes says Edmonton bookkeeping. They often try to claim as many expenses as they can on their personal tax return. To help minimize the taxes that they owe. These taxes are variety of things including income tax, CPP and EI as well as GST, and fuel tax just to name a few.
Therefore, if people have rental income on properties that they own. And then rent out, they can claim that income on their personal tax return. Which means there are expenses that they can claim related to maintaining that rental property. However there are many exceptions that they need to know about.
For example, many people want to know if they can deduct the cost of the utilities as an expense on their personal taxes. And while the answer is yes, they can claim many utilities such as gas, oil, electricity and water. They can also claim things such as cable, Internet and phone.
However, people need to be aware that this is claimable as long as there rental agreement specifies that the property owner pays for those utilities. If the rental agreement does not specify this. Edmonton bookkeeping says they can not claim that those utilities on their personal taxes. Or, if the renter pays for them themselves.
Even if a person is renting out a room in their house. They can claim a percentage of those same utilities on their personal taxes. As long as it is specified in the rental agreement for that room. That the owner will pay for the utilities.
Another important thing to take into consideration on claiming utilities on a room that is rented. Is that the property owner should only claim a percentage of those utility bills like a third or quarter of them. But never over 50%.
If they claim more than 50% of their utilities as rental expenses. They could lose their principal deduction on their personal taxes.
If a person needs to advertise in order to find a renter for their space. These advertising costs are deductible. As long as they are advertising through Canadian companies. it does not matter what form of advertising they are using, whether it is newspaper, radio, websites or through a broker. It must ensure that these are finding renters from within the country.
People may even claim office expenses. But not capital expenditures. And Canada revenue agency classifies capital expenditures as anything that is going to last for a year or longer. So while they will be able to claim supplies such as paper, pens and highlighters for example. They would not be able to claim things such as a calculator, a chair or a desk.
Therefore, people need to be very careful not to claim more office expenses than they are entitled. Otherwise, they could risk getting audited by Canada revenue agency.
Learning how to claim their rental expenses can be complex. And if people want to minimize the chances of them making an error. They can contact their Edmonton bookkeeping company to take care of their personal tax return on their behalf. So that they can ensure they will not make errors in claiming expenses that are not valid.
Is There Anything Special About Your Edmonton Bookkeeping Service?
There is a wide variety of reasons why a person might have rental income says Edmonton bookkeeping. Whether they are purchasing properties in order to generate income. Or if they have been unable to sell their previous home before they moved to their new one.
Regardless of the reason why people might have rental income. Canada revenue agency considers this personal income. And when claiming it, it is important to claim it as net income. Whether it is on one property, several properties. Even if a person is charging for rent on a single room in their home.
And since there rental income is not considered business income, that means they can claim the expenses that they incurred maintaining that rental property as personal expenses as well.
People might need to hire management staff, or maintenance personnel to help maintain their property. Especially if they have many different rental properties. Or if there rental property is a long distance away.
These people may do a wide variety of things such as collect rent from the renters, find renters if there is a vacancy. They might do maintenance on the properties. And however they get paid by the property owner says Edmonton bookkeeping. These are considered claimable expenses.
They can claim their wages, or salaries that they are paid. And if they work for the property owner on ongoing basis, even the benefits that they might receive can be deducted as an expense. With the only caveat being if the property owner provides labour themselves. It may not claim that as an expense on their tax return.
Even if they had to do those to the property, those repairs potential he can be claimed as expenses. However, Canada revenue agency prevents any thing that will be considered a capital cost to be claimed. For example, a property owner can catch a leaky roof, paint the home inside or out. And those would be considered claimable expenses.
However, if they had to replace one of the appliances that stopped working, because the life of that appliance would add value to the property. It cannot be claimed as an expense. Or, if they replaced the entire roof because it was bad. That extends the life of the property. Therefore it is not a claimable expense.
However, the capital costs, or the repairs or maintenance that extends the life of the rental property. Can instead get added to the value of the building that the property owner owns. So while the expense is not claimable. Their assets will increase.
With how complex this issue is. People may find it a lot more beneficial to them to let their Edmonton bookkeeping company take care of their personal tax return. So that they do not risk making mistakes on their personal tax return. That could potentially end with Canada revenue agency auditing their tax return.