# Rent income/loss



## Taxsaver (Jun 7, 2009)

2 topics: 

1. Home insurance

I have a cottage in Quebec where no one lives, - I live in Ontario. I asked my insurance company if I can rent it out. They told me that they would not cover me for short-term renting, like daily and weekly. But they would cover me for a 3 or more month renting. They added that some other companies might do the short-term covering. I have not inquired about them as of yet. Some people told me to rent it without telling the insurance company. This is NOT an option I want to hear about.

2. Income tax

Since I did not rent out at all in 2012, I will obviously have a loss for the year because of expenses. May I use this loss in my income tax form against my employment income or may I use it only in the future when I have renting income?


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## Just a Guy (Mar 27, 2012)

Was this originally planned to be an investment? It doesn't look like it to me since you never got the proper insurance to begin with. You may get away with it, but closer inspection by ccra may have it come back to bite you.


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## andrewf (Mar 1, 2010)

I'm not a tax expert, so take this comment with a grain of salt. If the cottage is an asset that has a reasonable expectation of profit (you think you can rent it for a profit in the future), you can treat it as an investment, and any expenses related to it would be deductible from your income. You should really consult an accountant before doing this, though.


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## cardhu (May 26, 2009)

taxsaver said:


> Some people told me to rent it without telling the insurance company.


Bad idea, you are wise to reject it. 



taxsaver said:


> May I use this loss in my income tax form against my employment income or may I use it only in the future when I have renting income?


Neither. It is a personal use property, and your expenses are your own. 

If you decide to rent the place out for a few weeks in a _ future_ year, then a prorated portion of your _ future_ expenses may be deductible from your income in that year. But your 2012 costs are yours and yours alone.


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## MoneyGal (Apr 24, 2009)

:encouragement:


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## Square Root (Jan 30, 2010)

i gotta hand it to you Cardhu, you really know a lot about taxes. Are you in the business? Maybe a tax auditor?


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## Taxsaver (Jun 7, 2009)

Just a Guy said:


> Was this originally planned to be an investment? It doesn't look like it to me since you never got the proper insurance to begin with. You may get away with it, but closer inspection by ccra may have it come back to bite you.


Not planned as investment. I will move in my cottage, whatever my financial or whatever situation I am in, in 2015. In 2012, I could not rent it out anyway because of upgrades (like the installation of a water well).


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## Taxsaver (Jun 7, 2009)

andrewf said:


> I'm not a tax expert, so take this comment with a grain of salt. If the cottage is an asset that has a reasonable expectation of profit (you think you can rent it for a profit in the future), you can treat it as an investment, and any expenses related to it would be deductible from your income. You should really consult an accountant before doing this, though.


I will see an account. Thanks.


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## Taxsaver (Jun 7, 2009)

Another thing I should have added: The insurer seems to think I'm too risky because I don't have a history of insurance with them and that I am very far away from the cottage, so I can't keep an eye on what would be going on in the cottage. It seems to be a lot of reasons that add up to see me as too risky. In any case, I will call other insurance companies to see what they say.


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## cardhu (May 26, 2009)

SQRT said:


> i gotta hand it to you Cardhu, you really know a lot about taxes. Are you in the business? Maybe a tax auditor?


Thanks SQRT, although this particular item is not exactly complicated ... no, I’m not a tax auditor, nor in the business ... past or present ... I make my living in a field completely unrelated to finance, actually ... I’m merely a taxpayer with a healthy desire to minimize the amount I pay, and I figure the best way to minimize taxes is to understand them. ... I’ve done a fair bit of research over the years, in areas that impact me personally. 



taxsaver said:


> ... installation of a water well.


Is this one of the expenses you’re referring to when you refer to a “loss” for 2012? This kind of expense couldn’t have been deducted from your income even if the cottage had been fully rented for all of 2012 ... it’s a capital expense ... however, it should be factored in to your adjusted cost base (ACB) which will reduce your capital gains exposure, when the property is eventually sold.


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## Square Root (Jan 30, 2010)

Well wherever you got the understanding Cardhu, I appreciate you posting on tax matters.


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