Basic bookkeeping to ease filling out T776

[OttawaLandlord]

I'm very familiar with Quickbooks for bookkeeping my IT consulting services (incorporated). However, I have some questions as far as how to categorize certain rental expenses (T776). I just don't want to "catch-all" too many expenses as "Line 9270 - Other expenses" if they fit some other more specific expense. Could someone suggests me the more appropriate category (as per the T776 form) for the following expenses?



1) Fees paid to investigate prospect tenants (e.g. RentCheck or TVS fees to get the consumer reports). Would that be "Management and Administration (line 8871)" since in a way these fees are to "find new tenants"?



2) Fees paid to collect rent payments through a billing systems (e.g. Tenant Pay). Basically tenants pay through their bank's billing system and the money is deposited in my account. I pay a few dollars per transaction. Would this be "Management and Administration (line 8871)" since in a way these are fees to "collect rent"?



4) What about exterior signs (e.g. directional signs, lawn / A-Frame signs).. Is that advertising (line 8521) or a Class 8 asset? (since they can be used for several years and for multiple properties).



5) I keep separate accounts (chequing, lines of credit, mortgages, credit card) for anything related to my rental. There are a few bank charges (monthly fees, statement printout, etc...). Are they registered as "Other Expenses (line 9270)"?



6) What about memberships like Ottawa Real Estate Investor Organization or Ontario Landlords Association. Are they really deductible? (I know most people deduct memberships... this question is for those who have gone through a CRA audit and who report rental income using T776 - not as a corporation).



These are new properties (this year) and therefore I do not need to file until next year (April 2015). Unfortunately currently I don't have an accountant (the one I had just retired!) to ask these very simple questions and I want to continue the bookkeeping as close as it should be (since I do not like to postpone the bookkeeping for later).



Any help is very welcome.



Regards



/Alex

 

[tkjca]

Hi Alex:



1) Management and Admin

2) Other expense - bank fees (or you can put it as office)

4) Advertising. There is a concept called materiality (CRA knows this concept very well). If it is small cost items, expense them, if not, the question is if they should be capitalized. And there could be a gray area at times. So it depends.

5) As in #2 above

6) depends... an expense can be deducted if they are incurred with a reasonable expectation of profit. You will need to speak with your accountant directly on this... or as you have mentioned, find another one.



for more info on how this form is completed, go here:



http://www.cra-arc.gc.ca/tx/bsnss/tpcs/rntl/bt/rprt/xpns/menu-eng.html





TJ

 

[OttawaLandlord]

Thanks TJ for your reply! (I was wondering why you hadn't answered point number 3 ).

 

[jphillips]

Dube and Cuttini will take care of all this for you. You know it will be done right and the cost is minimal, I believe it is $75 per T776. They are extremely easy to deal with, understand JV's and they know the accounting world inside and out.



For the amount of time it takes to do it yourself and the possibility of costly errors, let the pro's do what they do...







Jeff