Rental property loss?

[realguru12]

I bought my first house in Edmonton when the market was at its peak and is currently paying $1900/month for a fixed-term mortgage due 2014. I would be losing about $25,000 to 30,000 if I decide to sell it now. I want to buy and move to a new house and have the current one rented but figured that the max that I can rent it for is $1500. Can I legitimately declare the $400 difference (plus other expense) a loss?



Thanks in advance!

 

[bizaro86]

Only the interest portion of the mortgage on a rental property is tax deductible. The principal portion of your payment isn't a tax deduction.



However, you would also be able to deduct the property taxes and insurance, as well as any maintenance expenses.



Regards,



Michael

 

[Thomas Beyer]

[quote user=bizaro86]deduct the property taxes and insurance,


Any expense that is actual and reasonable is deductable: interest, insurance, property management fee, repairs, property taxes, ..



CRA has some guidelines .. see here: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/126/menu-eng.html click around there .. it shows in great depth what you can deduct or not .. and what has to be capitalized, then amortized, usually a major item like a new roof, new windows, new kitchen etc. ..

 

[Thomas Beyer]

[quote user=realguru12]Can I legitimately declare the $400 difference (plus other expense) a loss?
not quite .. only actual rent minus actual (and allowable) expenses .. see other post !

 

[realguru12]

Thanks for your reply. I'm pretty new to this and still learning so pardon my annoyance. So how do you determine your rental income? Don't you consider your monthly mortgage in the equation?



For example:

Mortgage = $1000

Rent=$1400



1400-1000=$400 rental income (?) Is that how you should be doing the math?



Thanks for your patience!

 

[bizaro86]

You only include the interest portion of your mortgage payment, not the principal portion.



For example, if your payment was $1000 maybe 800 would be interest and 200 principal



So the calculation would be



1400 rent - 800 interest - taxes - insurance - utilities - everything else you used for the property = rental income



If you got a CMHC insured loan when you purchased the property, you can also deduct the premium paid to CMHC over a period of time.



Regards,



Michael