Rental Property Income- CRA topics
We get asked a lot of questions about rental properties from current and new clients. With the media & news outlets reporting on rental properties and short-term rentals, it’s definitely a hot-topic among many of our clients. At Cahill CPA we have been staying on top of the latest CRA rental property tax information and regulations. Below we have created a short summary of some of the important information to help you understand more about rental properties in British Columbia, as well as provided some links for more detailed information. This can be a very complex issue, and we are here to answer any additional questions you might have.
The first thing to determine, is whether your property is rental income or business income. This can considerably change things like the taxes to be paid or the expenses that can be deducted. The short answer to the question of rental or business income is whether or not you provide additional services such as cleaning, security, meals, etc (in addition to the basic services of heat, light, etc). If additional services provided are above and beyond the basics, chances are you are running a business.
Cahill CPA can help you determine whether you are claiming rental or business income, and therefore which forms to include in your tax return. CRA Link for more information.
Another important detail our clients ask about is what they are able to deduct from their rental expenses. There are both current and capital expenses you can deduct, and for the most part, the list is pretty extensive.
Generally, the following ARE deductible when incurring rental income expenses:
- Advertising (including fees for AIR BNB or VRBO)
- Accounting or Legal fees
- Maintenance, Repairs (including materials and hired labour)
- Travel (expenses to travel to your property)
- Utilities (gas, oil, water, cable, electricity)
- Management and administration fees
- Motor vehicle expenses
- Office expenses (including stationary & stamps)
- Other expenses
- Prepaid expenses
- Property taxes
- Salaries, wages, and benefits (including employer’s contributions)
For more information from CRA on deductible and non-deductible expenses, link here.
Keeping records for your rental property is very important. Keep all receipts, statements, emails, slips, etc. in a secure, organized manner. The more information you keep, the better. For example, even invoices for work done or appliances repaired is helpful to have on record.
When you file your tax return, rent your property, or sell your property, always consult your accountant to ensure that you are claiming all taxes, reporting all losses & gains, and paying all necessary fees. Because rental properties, especially short-term rentals, have been a major political & community issue in British Columbia (and in North Vancouver & Vancouver especially), many people are receiving misinformation regarding their rental properties. When in doubt, arrange a meeting with one of our accountants and we will be happy to help!