# Rental Income



## CuriousReader (Apr 3, 2009)

So income tax season again ... and this time, I have a little bit more complication in my return because of rental income. late last year I bought a 3-bedroom condo, I rent out 2 of the rooms to friends (obviously, shared kitchen, etc).

How should I go about an report this rental income? How can I deduct the approppriate costs (mortgage, condo fee?)? Any specific forms that I should be filling in?

Also, should I actually register of some kind that I am a "landlord" now?


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## GeniusBoy27 (Jun 11, 2010)

Easy

Income = money from your friends for rent

For liabilities, you can claim only on the portion, not personally used (2/3 - rental, 1/3 - personal)

Liabilities = Mortgage interest (not principal -- get info from your annual mortgage statement from your bank) + Condo Fees + Hydro + Heat + Property Tax + Water and Sever + House Insurance + Cable (if shared) + Telephone (if shared) + Other stuff I'm probably not thinking about

2/3 of the above liabilities is what you can claim. 

Now, if you really wanted to be creative, you could in theory claim your tax preparation software. (Because I can't do my complicated rental taxes without my tax preparation software, and a portion (i.e. for the business purposes of running your rental unit) of your computer, because you need a computer to run the software, and a printer to print the taxes out, ... Creative accounting is fun!) 

Hope that helps!


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## CuriousReader (Apr 3, 2009)

Thanks!

Is there specific forms that I need to fill? (ie. which section/line does all this stuff goes into?)


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## stardancer (Apr 26, 2009)

T776 Rental Statement

http://www.cra-arc.gc.ca/E/pub/tg/t4036/README.html


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## CuriousReader (Apr 3, 2009)

stardancer said:


> T776 Rental Statement
> 
> http://www.cra-arc.gc.ca/E/pub/tg/t4036/README.html


Thanks!

There's an "account number" on top of the T776 (http://www.cra-arc.gc.ca/E/pbg/tf/t776/t776-10e.pdf) form. 

Does that mean I need to register of some sort first that now I have rental income?

Thanks


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## balexis (Apr 4, 2009)

Hi Curious,
I had the same questions 3 years ago when I bought my duplex. I suggest you meet with an accountant now, to set you straight for your initial year. The next years will be pretty much copy-and-paste, with different numbers, so this year is the important one.

I tried to do everything by myself on year 1, and learned 2 years later that I can deduct the CMHC insurance (1/5th of the amount every year, for 5 years). I was lucky to hear about that, and filed a T1-ADJ, but I could've missed on a big deduction because of my ignorance.

There are quite a lot of details you need to know that are not obvious to the first-time owner of a rental. For example, your lawyer's fees and transfert tax cannot be deducted, but need to be capitalized. 

Here is the CRA guide you should read, re-read and thoroughly understand:
http://www.cra-arc.gc.ca/E/pub/tg/t4036/t4036-10e.pdf


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