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Paying more rent than earning

rental income

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#1 seriousbusiness

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Posted 25 May 2016 - 02:30 PM

Hope someone can help me out, I can't find any advice anywhere online.

I'm in a situation for a couple years where I need to rent out my house to tenants, and rent another house closer to work. I'm paying much more in rent than I'm earning from my tenants. Is there any way I can use this to my advantage on my return? I don't like the idea of paying income tax on rent if I'm already in the negative.

Thanks in advance!



#2 Gaetan

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Posted 27 May 2016 - 12:30 PM

Hi seriousbusiness,

 

We suggest that you contact the CRA at 1-800-959-7383 for more information.
 



#3 Mars

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Posted 24 November 2016 - 07:35 AM

Hope someone can help me out, I can't find any advice anywhere online.

I'm in a situation for a couple years where I need to rent out my house to tenants, and rent another house closer to work. I'm paying much more in rent than I'm earning from my tenants. Is there any way I can use this to my advantage on my return? I don't like the idea of paying income tax on rent if I'm already in the negative.

Thanks in advance!

 

I seriousbusiness. I'm in a similar situation so I'd be interested to hear what your found out. Mathew.



#4 Gaetan

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Posted 24 November 2016 - 08:45 AM

Hi,

 

In order to enter information about your rental income, follow the steps below:

1. In the "Left-side menu on the Interview tab", select "Interview setup" and on the page that appears on the right, go to the "Rental income" group, check the box "Rental property income" and click "Next" at the bottom of the page.

2. Return to the "Left-side menu on the Interview tab", select "Rental Income" and on the page that appears, choose "T776 - Rental Income property".

3. Complete the first page entitled "T776 - Rental property identification". On the line for "Percentage (%) of personal use of your rental property", enter your personal use portion of the building. If you do not live in the building, leave the field blank.

4. On the next page, enter your income and expenses in relation to this property.

5. If you used the services of a professional contractor to repair your building, use the sub-section "Labor costs" to enter the relevant information. Please make sure in this subsection that the amount of repair has not already been entered in the expenses beforehand: make sure to choose the appropriate option from the drop-down menu for the line "Do you wish to add these labour costs as an expense on the income statement".

6. If you want to claim depreciation for your property, click on the "CCA" sub-section and select the appropriate class, usually Class 1.

7. On the page that appears, enter the relevant information. If you do not want to claim depreciation, go to the line "Limit to the CCA or the CECA of this class" and enter "$0.00". However if you wish to claim a portion of the depreciation or any other amount, it is limited to the maximum amount of this category. Please note that you cannot claim CCA when you have a rental loss.

8. If you are the co-owner of the building with your spouse or other partner, click on the sub-section "Partners", and on the page to the right, choose your option.

9. If your spouse is a co-owner of the rental property and completed his or her tax return along with yours, there is no need to enter the information in your spouse's file, as it will be transferred by the program and form T776 will be generated. The same applies for a resident of Quebec and form TP-128 will be produced by the program. However, if your spouse wants to claim expenses different from yours, all the information will then have to be entered again separately in his or her own file. For all other business partners they will have to enter the information in their own file.

Forms T776 (federal) will be generated by the program.

The amount of rental income will be reported on line 160 (gross) and line 126 (net) of the federal return.

For more information, please consult the CRA website at the following link:

http://www.cra-arc.g...6/menu-eng.html







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