# Rantal of Principle Residence



## sonoshan (Dec 9, 2015)

Our family had to move provinces last year for work. We tried to sell our house for 4 months and when it did not sell we decided to rent it with the intention of listing it again in 2016 once the lease is up. 

What, if anything, do I need to put on my taxes for this situation?

Thanks!


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## sonoshan (Dec 9, 2015)

Sorry for the typo in the title, should read "rental" not "rantal"...

Just further to my question above is am I required to claim CCA?


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## Just a Guy (Mar 27, 2012)

You report the rental money as income, you can deduct some expenses you incurred. If you only own one rental, there are limitations on what is considered a valid expense. You also need to report ownership stake as that determines your liability for the taxes (so real estate has built in income splitting if you have multiple people on the title).


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## Davis (Nov 11, 2014)

What JAG said. And, you are not required to claim a deduction for capital cost allowance. You can choose to claim that deduction to reduce your net income from the rental, but you can't use it to create or increase a loss from the rental. If you have a loss from the rental, you can apply it against other income. 

CRA has a guide for rental income that you should read.

There are a lot of non-tax issues to consider when thinking about becoming a landlord. You should read a bunch of the discussion we've had here to get a better idea of what you're in for.


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## sonoshan (Dec 9, 2015)

Thanks. We have had several rental properties in the past but got heavily dinged with capital gains when we sold one last year and yes, we were claiming the CCA. Since we were planning to sell this property initially and still may do so in 2016, I wanted to avoid as many extra tax costs as possible, but still be legal. 

Unfortunately (or not) our 2015 income is going to be quite high for a few non-typical reasons.


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## Spudd (Oct 11, 2011)

Did you move in 2015? If so, you can claim moving expenses as well.


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## Davis (Nov 11, 2014)

Sonoshan, I think you should look at how CCA works: a $100 claim for CCA reduces your rental income by $100. If you are paying 40% tax, then you save $40. 

Later, when you sell, your cost base is $100 lower, which means your capital gain will be $100 more than it would have been if you hadn't claimed CCA. 

A $100 capital gain means a $50 _taxable_ capital gains, an therefore $20 of additional tax.

I'd be happy to pay $200 more tax in the future to save $40 of tax now if I could.


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## Just a Guy (Mar 27, 2012)

You should also determine what the fair market value of the property is before you convert it to a rental (you'll need documentation). The capital gains only applies to the capital gain of the property after conversion to a rental, there is no capital gain on a personal residence. 

Running a rental isn't as straightforward as saying, "it's now a rental". It's not complicated, but there is proper paperwork and filing that needs to be done. You also can't remortgage it afterwards to claim he interest (at least not Ina straightforward manner, there are some hoops you can jump through to do it though).


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