Income Splitting

[invst4profit]

This question has come up on another site I frequent and I am curious as to how each investor attributes there rental income.
My wife and I own our property 50/50. Our accountant divides the income based on the % of time each spends maintaining the property. Book keeping, banking, travel time, repairs etc.
In our case this works out to be a 70/30 split which is how he then divides the income for tax purposes.
At time of sale the value will be divided 50/50 for taxation purposes.

Mainly for small investors in the case of spouses, not JVs, how does your accountant divide your rental income?

 

[Thomas Beyer]

QUOTE (invst4profit @ Apr 17 2009, 08:06 AM) This question has come up on another site I frequent and I am curious as to how each investor attributes there rental income.
My wife and I own our property 50/50. Our accountant divides the income based on the % of time each spends maintaining the property. Book keeping, banking, travel time, repairs etc.
In our case this works out to be a 70/30 split which is how he then divides the income for tax purposes.
At time of sale the value will be divided 50/50 for taxation purposes.

Mainly for small investors in the case of spouses, not JVs, how does your accountant divide your rental income?
weird ..
a) why is there is taxable income, after CCA ?
b) why allocate income (if any) not 50/50 ?

In my humble opinion, you could allocate COST according to time spent .. but not the income !

 

[invst4profit]

The taxable income on the property after deductions is small. Only about $10,000 last year.
The reason for splitting is because I am in a high tax bracket and my wife is in the lowest bracket.

The reason for asking is because the opinion on the other site is you "must" claim the income 50/50, based on ownership, which we have never done.

I work full time and with my wife working part time she has spend more time running the business therefore making sense to split the income and expenses accordingly.

I am most curious about the legalities of splitting income/expenses on a joint ownership other than 50/50. I have never had any reason to questioned my accountants approach until now.

 

[Thomas Beyer]

QUOTE (invst4profit @ Apr 17 2009, 12:02 PM) The taxable income on the property after deductions is small. Only about $10,000 last year.
The reason for splitting is because I am in a high tax bracket and my wife is in the lowest bracket.

The reason for asking is because the opinion on the other site is you "must" claim the income 50/50, based on ownership, which we have never done.

I work full time and with my wife working part time she has spend more time running the business therefore making sense to split the income and expenses accordingly.

I am most curious about the legalities of splitting income/expenses on a joint ownership other than 50/50. I have never had any reason to questioned my accountants approach until now.
50/50 makes sense if ownership is 50/50 !!

why not hire your wife for a few more hours, and at higher/h rates, say @ $75/h as opposed to $15 ??


or have higher depreciation/CCA (4%/year max.) .. do you claim the full 4% CCA ?

 

[navaz]

Most clients split 50-50. But this allocation is done based on ownership- not time or effort. Once you put that down- you cannot change ownership without realizing a sale