Tax Time!

[vicktown]

Hello everyone.



Last year my girlfriend and I purchased a split level duplex for the obvious reason of gaining some income from the basement. I am now navigating through Turbo Tax putting together my tax return. So far I will be claiming:

• The revenue generated
  [*]Contractor and material costs for renovations (maintenance and repairs)
  
  And because we rent only 1/2 the home we will claim 1/2 of:
  
  
  [*]Utilities (as we pay these)
  Insurance
  Interest on Mortgage
  Property Taxes

I have learned a lot from the web and from the Turbo Tax forum on what and how to claim various expenses, but I do have one question:



I purchased a number of tools to complete various maintenance renovations in the rental unit and I was wondering if I could claim these as an expense, and if so, where?



Any other suggestions about what to claim and how would be appreciated.



Graham

 

[fisher1]

I think that you should maybe get an accountant to do your tax instead of using turbo tax. Try and save money somewhere else.

 

[VicChung]

Hi Graham,



When my wife and I started our investment career, I was doing our taxes as we only had 2 properties. After our third property, we started using Albert Ritchot (403) 616-5759 and wished we had started using him earlier as he understood the tax rules much better than we did. It has been 6 years now and we have grown our portfolio to 10 properties. My accountant has saved us money every year and most important, we have more time to focus on growing our portfolio.



We would like to recommend him if you are looking for an honest and affordable expert.



Regards, Vic

 

[HeatherBrandt]

I suggest you go to the CRA website and start reading if you haven't already. There are several bulletins that can help although some take more thought than others!



I'm not sure if your property is suited or if you are renting out rooms. I believe CRA wants you to separate out personal vs common area vs rental use based on square footage and then that percentage is applied to relevent expenses. (ie-suite is 40 % of total square footage, and because the laundry area is shared-50 % of expenses can be claimed).



It used to be that if a tool was less than $200, you could write if off in one tax year, if the cost was higher you had to write it off over a few years depending on what class it belonged to.



If you bought your property in 2011, the renovations may be considered a capital expense rather than the repair/ maintenance that you would normally expect.

 

[Sherilynn]

I agree that you should get an accountant. The cost is very small when you only have a couple of properties. And the price is high if you screw up your taxes and get audited, even if it only costs you time.



The tools are a tricky one. As mentioned, the CRA website has a section on CCA (capital cost allowance) that deals with tools and equipment. I believe we use Class 12 and the allowance has increased to $500. If you google "Class 12 tools" the page should pop up for you.



But you should doublecheck the rules about claiming tools especially since the suite is in your personal residence. We have only claimed tools that we bought for a specific purpose for a renovation, and we had no intention at that time to use them for personal use. That point gets more difficult to argue when the renovation is in your own house.