Maximize Rental Property Deductions

Given the heated real-estate market in Toronto, there are several investors that have tapped into this market by acquiring investment properties for rental purposes. However, most owners are not aware of all the deductions allowed by the CRA under Rental Income. Still Accounting has the expertise on how to maximize the deductions from your rental income.

Below we have identified the list of expenses that can be deducted to reduce rental income:

Please note: If renting out a basement, then the expenses will need to be pro-rated on the square footage of the section being rented out. Contact us for any assistance when filing your 2017 tax return and we will be glad to help you out.

  • Mortgage Interest: Any interest that is paid on the funds borrowed to buy your rental property. The interest can only be for the current year and  you can only claim interest portion, not the entire mortgage installment payments.
  • Insurance: Premium paid for home insurance is deductible but only for the current year. If prepaid several years in advance, you can only deduct the portion for the tax filing year.
  • Advertising: Fees paid for advertising to look for tenants are deductible. Any paid advertisement is 100% deductible if it is fully related to the rental property.
  • Office expenses: You can claim the deduction for expenses such as computers, office supplies, telephone (if used for rental business exclusively), stationery, stamps, etc. items.
  • Legal, accounting and other professional fees: You can claim legal fees incurred for collecting outstanding rents, or having a lease agreement reviewed. You can also deduct fees paid for bookkeeping, financial statements, preparation of tax and any other information returns.
  • Maintenance and repairs: Any repairs and maintenance done to the property is deductible. If you repair it yourself, then only the materials are deductible but you cannot deduct a monetary value for your own labour.
  • Management and administration fees: Amount paid to a property management company or a property manager to manage your rental property.
  • Property taxes: Amount assessed by a province or territory and by a Canadian municipality as property taxes relating to your rental property and you paid for it is deductible. These can vary across the GTA with Mississauga, Richmond Hill tax rates being higher than those in Toronto.
  • Vehicle & Travel: Any travel expense incurred to travel to your rental property location for the collection of rents and/or supervise repair and maintenance works, you can deduct expenses incurred for travel but not including boarding and lodging. It is advisable to keep a travel log.
  • Utilities: If the rental agreement specifies that you have to pay for expenses such as gas, oil, electricity, water, sewerage, and cable, you can deduct these expenses.

Salaries, and benefits:  If you employ superintendents, maintenance personnel and any other staff to take care of your rental property; the salary paid to the employees is deductible including statutory benefits, as well additional benefits provided by you.

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