# Rental Income



## Murph (Sep 9, 2009)

Hi everyone, I currently rent a condo that will be fully paid next November. I'm wondering what strategies I could use to minimize taxes next year on rental income (since mortgage interest is no longer tax deductible) ? I know that I could use the rental income to contribute to an RRSP which would probably help, but are their other possibilities? I"m wondering if I take out a small heloc to invest would this help ? Since I fall into a low tax bracket (under 30k) is it worth doing this? Any feedback is much appreciated.


----------



## marina628 (Dec 14, 2010)

Does the property need any renovations or repairs?


----------



## jamesbe (May 8, 2010)

Pay the tax and enjoy the profits or take the equity and buy another property... if you can find one.


----------



## Murph (Sep 9, 2009)

jamesbe said:


> Pay the tax and enjoy the profits or take the equity and buy another property... if you can find one.


Thanks but no thanks, wouldn't invest in this frothing market, and no, not many repairs to do, renovated recently. If I take a small heloc to invest it does become tax deductible if I am correct ??


----------



## K-133 (Apr 30, 2010)

Murph said:


> Thanks but no thanks, wouldn't invest in this frothing market, and no, not many repairs to do, renovated recently. If I take a small heloc to invest it does become tax deductible if I am correct ??


If the money borrowed is used to invest than the interest becomes tax deductible.

If you plan on borrowing the money for a period of time, you would be wise to consider a simple mortgage refinance. Unless you are more eager to pay the bank than the tax man.

Then again, you've probably worked purposefully to reduce the mortgage on the property to nothing, which should bring up the question; why did I want to do that in the first place?

If you don't have a pension in place, other than your RE assets, you may be prudent to consider dropping it into your RRSPs. If you build those up enough, once the market cools off, you could pay yourself the mortgage interest by borrowing from the RRSP.

Overall, I think you need to figure out what the goals are and decide based upon that. You have plenty of options, many of which are divergent paths.


----------



## andrewf (Mar 1, 2010)

Your approximate age/years to retirement is probably relevant. Do you expect your income to be stable around $30k?


----------



## Sampson (Apr 3, 2009)

Murph said:


> I"m wondering if I take out a small heloc to invest would this help ?


Yes, but only if you believe you will earn on those investments.

You could obviously just take the tax-deducted income from the rental and invest that without leverage.


----------

