How must will I pay in taxes on my rental income?
After deducting your rental expenses, your net rental income will be added to your total taxable income and will be taxes according to marginal tax rates.
For example, if your taxable income is 100k, your marginal tax rate is about 43%. For $100 net rental income, you have to pay $43 in taxes.
My wife and I own a rental property together. How should we report the rental income or loss?
The person who owns the rental property must report the income or loss. If you are a co-owner with your wife, both of you must report it. The share of the rental income or loss will depend on your share of ownership.
The rental income or loss percentage you report should be the same for each year unless the percentage of your ownership in the property changes.
I have a rental loss, how will it affect my income taxes?
The rental loss will be used to reduce your other taxable income and you will save on taxes.
My tenant refuses to pay rent past a year, can I report all the uncollected rent as a loss?
You can claim the uncollected rent as a bad debt only if you have already claimed the rent as income in the previous tax year. If you didn’t include the uncollected rent as your rental income, you can only claim rental operating expenses (mortgages interest, insurance, property tax, etc.), and the total amount of these operating expenses will be your rental loss.
My parent lives in my investment property. Should I report rental income or loss?
If your parent only pays you a small amount for upkeep of your house, you don’t report this amount as rental income and you can’t claim rental expenses.
You can only claim a rental loss if you are renting the property to your parents for the same rate as you would charge other tenants you don’t know.
I bought a new residential rental property. How can I claim the GST/HST rebate?
You can apply the GST/HST rebate through CRA My Account. You will need to
- Fill out form GST 524 for Federal rebate
- Fill out form RC7524 for Ontario rebate
- Submit the lease agreement for your rental property
- Submit agreements of purchase and sales of your rental property
The maximum Federal rebate is $6,300 and the maximum Ontario rebate is $24,000
I sold my rental property for $400k, paid agent fee of $20k and a $2k legal fee. The purchase cost of the property was $300k. I renovated it before selling it. The renovation cost was $22k. How do I calculate the capital gain?
The calculation is as below. Half of the total capital gain will be added as taxable income. For example, if your other taxable income is $100k, after adding the capital gain, your taxable income will be $150k. The tax for the capital gain of 50k is about 50k x 43% = $21,500.
| Selling Price | 400,000 |
| Legal fee | 2,000 |
| Agent fee | 10,000 |
| Cost of Purchase | 300,000 |
| Renovation | 12,000 |
| Total Capital Gain | 100,000 |
| Taxable Capital Gain | 50,000 |
I sold my rental property to my son at a lower price than the fair market value. How do I calculate the capital gain?
The calculation is similar as above, but you must use fair market value instead of the selling price to calculate the capital gain.
