I have recently had a question posed to me by my tenants living in a rent-to-own house (semi-detached):
Can they deduct the rental payments against their business income for income tax purposes ?
My guess is that the base lease payment portion (i.e. the full lease payment minus the monthly credit to lessee) could be used toward a deduction against their business income tax, up to the maximum allowed by CRA. So, say they used 1 room (maybe 15% of the full house area) as an office for the business, and say their base lease payment was $1,000 per month, they could deduct $150 / month from their business income.
I would sincerely appreciate any comments. (I am not asking for professional tax advice, only your opinions, hopefully based on real life examples.) John
Can they deduct the rental payments against their business income for income tax purposes ?
My guess is that the base lease payment portion (i.e. the full lease payment minus the monthly credit to lessee) could be used toward a deduction against their business income tax, up to the maximum allowed by CRA. So, say they used 1 room (maybe 15% of the full house area) as an office for the business, and say their base lease payment was $1,000 per month, they could deduct $150 / month from their business income.
I would sincerely appreciate any comments. (I am not asking for professional tax advice, only your opinions, hopefully based on real life examples.) John