Lesser-Known Tax Tips for Property Owners

If you’re including a rental property on your personal tax return, the income is considered earned income that will impact your RSP contribution room. In most cases, your RSP contribution limit will be 18 per cent of your earned income in a given year. So more rental revenue equals more opportunity to sock away money for your retirement.

If you own several properties and you pay your spouse a small salary to help you manage their administration, maintenance and management, you could benefit from income splitting. This would require that the properties be listed under both you and your spouse’s names. To qualify, both partners must be considered married or common law and be Canadian citizens on December 31 of the given tax year.

Anytime you visit your property to do a site visit, conduct renovations or to meet a new tenant, you can deduct travel expenses such as airfare, bus or train tickets incurred on those excursions. If you live in driving distance from the property, you can claim mileage as an expense. While the costs of getting to a destination are considered tax deductible business expenses for landlord-related travel, amounts paid for lodging and meals when you arrive are not.

Yes, those pesky bank charges, including monthly fees and overdraft fees can actually be written off as tax deductible expenses. Same goes for mortgage application fees, legal fees related to putting together a rental contract and the accounting fees you’ll incur when your accountant applies these very tips. Also, the commission you pay to a real estate agent when you sell an investment property can be listed in Schedule 3, Capital Gains (or Losses).

The wages of maintenance service providers you hire to conduct repairs on your property are tax deductible. However, if you’re wondering if the sweat equity you put into maintaining and managing your property can be considered a tax write-off, think again. The CRA doesn’t view this as a taxable expense since you, the owner, will be benefitting from that work when/if you sell the property in future.

Throughout the year, be sure to keep hard or digital receipts of all of your property-related expenses. This will be useful for your accountant when they are preparing your tax return, and will be required by the CRA if you are audited one day. You can manage and organize your receipts using online tools and apps.

The tax filing deadline for most Canadians is May 2, 2022, while self-employed individuals have until June 15, 2022. Those late to file will incur a penalty as well as an interest payment of one per cent on their balance owing per month.

And if you need help with property management, tenant placement of real estate investing services, be sure to contact us.