Where to show basement rental income in tax return

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Pramod Chopra   
Member since: Sep 03
Posts: 1284
Location: Pickering, ON

Post ID: #PID Posted on: 03-03-09 23:47:37

Originally posted by ani70

I have a question regarding rental income:

Can I get some benefit if I put my condo on rent in Montreal but staying as a tenant in Ontario any paying more on rent than my rental income.

As for example:
Say my rental income in 2008 : $10000
I payed rent to my current landlord in 2008 : $15000

Can I show expense on my rental income outside condo maintenance?Ex:mortgage I am paying to the bank,condo fees etc etc or show some kind of differential amount(my rental income and rent I paid up).

I am using Ufile for quite some time now.The moment I am adding my rental income it's changing my net refund by almost by $2000.I was hoping to get good refund when I moved from Quebec to Ontario in end March 2008.:D



You have to include income from your rental property in Montreal and you can claim all related expenses on your tax return. These expenses would be mortgage interest, condo fee, property tax, insurance and any repairs etc. However, the rent you pay in Ontario would NOT offset that income. Moreover, you would also not get benefit of rental tax credit in Ontario as your family income is over the threshold.

To understand more about the rental income and expense follow this

Since, you moved to Ontario for Job, you can also claim moving expenses in your return. For more information on moving expenses, follow this http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns206-236/219/menu-eng.html


Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada

Member since: Oct 03
Posts: 765
Location: Canada

Post ID: #PID Posted on: 21-03-09 08:39:49

Thank you Pramod bhai for those halpful links:

I figured out something interesting.Under special situations looks like one can get some benefit on rental income upto 4 years:)

Special situations
There are situations to which the change-in-use rules stated above do not apply. The following are some of the more common situations.
Changing your principal residence to a rental property
When you change your principal residence to a rental property, you can make an election not to be considered as having started to use your principal residence as a rental property. This means you do not have to report any capital gain when you change its use. If you make this election:
you have to report the net rental income you earn; and
you cannot claim capital cost allowance (CCA) on the property.
While your election is in effect, you can designate the property as your principal residence for up to four years, even if you do not use your property as your principal residence. However, you can only do this if you do not designate any other property as your principal residence for this time.
You can extend the four-year limit indefinitely if all the following conditions are met:
you live away from your principal residence because your employer, or your spouse's or common-law partner's employer, wants you to relocate;
you and your spouse or common-law partner are not related to the employer;
you return to your original home while you or your spouse or common-law partner are still with the same employer or before the end of the year after the year in which this employment ends, or you die during the term of employment; and
your original home is at least 40 kilometres (by the shortest public route) farther than your temporary residence from your or your spouse's or common-law partner's new place of employment.
If you make this election, there is no immediate effect on your tax situation when you move back into your residence. However, if you change the use of the property again and do not make this election again, any gain you have from selling the property may be subject to tax.
To make this election, you have to file a letter signed by you with your return. The letter should describe the property and state that you are making an election under subsection 45(2) of the Income Tax Act.



Member since: Mar 09
Posts: 3

Post ID: #PID Posted on: 21-03-09 19:37:26

You should show your basement rental income/expense on a rental statement - T776. You can claim all expenses that you incurred in order to earn the rental income. Typical are mortgage interest, property taxes, repairs & maintenance and professional fees, insurance etc. You should backout your personal portion therefrom.

There are certain expenses that you should not claim, however. As it might jeopardize your tax-free principal residence exemption in future when you decide to sell your residence for a gain.

One piece of advice - it is appreciable that you're preparing your taxes by yourself. However, if you visit a professional, chances are that :

1) you will get it done error-proof as it is done using a software,
2) you will get it done a lot quicker without the aggravations,
3) you will know about and utilize some of the tax deductions and credits that you may not know yourself,
4) you will maximize your refund.

Thanks & hope that helps.
GTA Tax team

Contributors: Aurn(2) Pramod Chopra(2) Kalpna(2) ani70(2) AshwaniG(1) GTAtax(1)

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