As long as you can track everything from CRA`s point of view.
It can get messy if you have something else linked to that account (for example you feed the account on occassion from a business LOC --which has tax-deductible interest).
As a sole-proprietor business, you should be fine as CRA only cares about proper documentation about income and expenses. What you do with the property income is up to you.
CAVEAT: I`m no tax wizard, I just do the same thing on advice from my tax guy.
*Or if you want to make it more complicated...*
Check this out:
In our case, we`re doing the "Smith Maneuvre," so we pay all property expenses from Account A, which is fed by our business-only HELOC. We put all rental income cheques into Account B. From Account B we take out funds for personal stuff if we want, or pay down our principle residence mortgage. As we pay down our mortgage, our HELOC raises, giving us more capital to feed into Account A for expenses. (Basically turning personal mortgage debt into business debt)
(And, if you`d believe it, this is all legal!!!!) Just tell your bank what you`re doing so they don`t get worried when your HELOC keeps raising and you aren`t paying it off.
You simply have to make sure that CRA can see that you`re taking out "income" funds to use personally, and not business loan funds. (If you are taking out "business loan" funds, its not a huge deal, you just lose the interest deduction from that loan).
Sorry for the complicated answer to the short question.
