# New at Investment property taxes, am I doing it right?



## beerbaron105 (Jan 14, 2015)

I will be doing my taxes soon for 2014 and I closed on a brand new condo about halfway through the year, I got it rented shortly after and now it is time to be the "landlord" and "accountant" and do my own taxes! Here is a list of what I am writing off and wanted to see if I was correct?

I "xx'ed" out the numbers for my own privacy:

Income: $1x50 Monthly (August 1st, September 1st, October 1st, November 1st, December 1st)

Total: $x250.00

Expenses:

1. $1x12.50 ($1x50x13%HST) – Expense to screen and find tenant
2. $x00 – Condo insurance for the year
3. $x36.75 ($x5x13%HSTx5 months) – property management fees.
4. $x055.45 (x11.09x5 months((aug-dec)) – Condo fees
5. $x11.73 – toronto hydro 
6. $x16.65 (x83.33x5 months) – toronto property taxes
7. $x206.91 – 6 months of mortgage interest Jul 1-Dec 1 (going by the mortgage payment schedule)
8. $6.00 – parking for property management meeting
9. $7.89 – keys cut
10. $x7.71 – KIJIJI listings
11. $xx9.98 – Canada Landlord Network
12. $x6.29 – Canadian Landlord Educational Material
13. $14.66 – office supplies
14. $xx9.35 – HST rebate service lawyer
15. $xx2.91 – 20% of total land transfer tax to be written off over next 5 years (2014,2015,2016,2017,2018) – Total is $x614.56
16. $x186.50 – legal fees/disbursments

Total: $x331.28

Income $x250 – Expenses $x331.28 = -x,081.28



My biggest question is regarding being able to write off the legal fees for closing on the unit? Also does that mean I can write off other closing expenses like Tarion application, meter charges, and other small misc charges related to the Statement of Adjustments and related to this property because it is a rental unit?

Also, am I correct in writing of 20% of the land transfer tax over the next 5 years?

Anything I am missing?? It is being managed by property management so I don't really have any gas, wear and tear, cell phone, office space to write off


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## beerbaron105 (Jan 14, 2015)

Forgot to mention but I plan on using TurboTax Premier 2014 with its rental property functions, is that a good software? I have been using Ufile in previous years for my own taxes


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## stardancer (Apr 26, 2009)

"My biggest question is regarding being able to write off the legal fees for closing on the unit? Also does that mean I can write off other closing expenses like Tarion application, meter charges, and other small misc charges related to the Statement of Adjustments and related to this property because it is a rental unit?"

Legal fees are added to the cost of the property and become part of the ACB for calculating the capital gain/loss when you sell down the road. Generally, if the expense is on the lawyer's statement of disbursements in the closing costs, it becomes part of the purchase price.


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## Just a Guy (Mar 27, 2012)

You also need to be careful about things like "parking for the condo meeting" if this is the only property you own.

CRA has different rules for what is allowed to be written off based on the number of properties you own. I think you need to own 3 or more (this may have changed) to get the ability for full write offs (which includes things like travel to and from). 

Not sure exactly what is or isn't allowed anymore, I just remember you needed to own multiple before getting to write off certain things.

Of course, you could hire an accountant and write that off as an expense next year...


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## Guban (Jul 5, 2011)

+1 to what was written above.

I thought that it was 2 or more properties at different locations (eg units in the same condo building would not qualify) for the travel write offs, though.


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## beerbaron105 (Jan 14, 2015)

stardancer said:


> "My biggest question is regarding being able to write off the legal fees for closing on the unit? Also does that mean I can write off other closing expenses like Tarion application, meter charges, and other small misc charges related to the Statement of Adjustments and related to this property because it is a rental unit?"
> 
> Legal fees are added to the cost of the property and become part of the ACB for calculating the capital gain/loss when you sell down the road. Generally, if the expense is on the lawyer's statement of disbursements in the closing costs, it becomes part of the purchase price.


Sorry could you explain "ACB?"

And basically just leave legal fees until I sell but keep the record for those purposes?

What about land transfer?


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## beerbaron105 (Jan 14, 2015)

Just a Guy said:


> You also need to be careful about things like "parking for the condo meeting" if this is the only property you own.
> 
> CRA has different rules for what is allowed to be written off based on the number of properties you own. I think you need to own 3 or more (this may have changed) to get the ability for full write offs (which includes things like travel to and from).
> 
> ...


That's fine, I don't need to cause any flags over a few dollars in parking or related. Thank you


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## CPA Candidate (Dec 15, 2013)

Are you going to report this as income from business or income from property? It makes a difference. Income from property is passive, and fewer deductions are allowed. Income from business is taking an active role in management, and allows for more deductions.

If this is your lone investment property and someone else is managing the property, this is probably income from property. In that case, not all you have listed above is deductible.


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## beerbaron105 (Jan 14, 2015)

CPA Candidate said:


> Are you going to report this as income from business or income from property? It makes a difference. Income from property is passive, and fewer deductions are allowed. Income from business is taking an active role in management, and allows for more deductions.
> 
> If this is your lone investment property and someone else is managing the property, this is probably income from property. In that case, not all you have listed above is deductible.


It would be income from property then based on how you put it, could you please clarify what you mean by not all I have listed is deductible? Otherwise I am just staring at all of them and wondering, much appreciated and thanks in advance.


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## domelight (Oct 12, 2012)

Here's the link to determine vehicle expenses
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/rntl/bt/rprt/xpns/mtr/menu-eng.html

The land tfr tax must also be added to the ACB (purchase price) of the property. The five year indexing you are referring to is specific to "Borrowing Costs" Land Tfr tax is not a cost of borrowing. an example of a borrowing cost subject to the five year limitation would be CMHC Fee's


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## beerbaron105 (Jan 14, 2015)

domelight said:


> Here's the link to determine vehicle expenses
> http://www.cra-arc.gc.ca/tx/bsnss/tpcs/rntl/bt/rprt/xpns/mtr/menu-eng.html
> 
> The land tfr tax must also be added to the ACB (purchase price) of the property. The five year indexing you are referring to is specific to "Borrowing Costs" Land Tfr tax is not a cost of borrowing. an example of a borrowing cost subject to the five year limitation would be CMHC Fee's


Thank you for the clarification! I definitely do not qualify for any vehicle expenses. 

So forget about the land transfer tax for this return (as it will be a factor when I sell) and put the mortgage insurance premium on over the next 5 years?


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## gt_23 (Jan 18, 2014)

Items 14-16 can't be deducted from current income. They are capital expenses and must be included in the same class as the property, and depreciated at up to 4% a year. 

Why have you hired a property manager for a brand new condo rental, yet you won't pay an accountant to do your taxes correctly?


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