Category: Real Estate Tax

I rent out a residential property. What are some tax implications, with regards to sales tax?

Rental income is a GST/HST exempt supply. This means that you cannot charge GST/HST on rent. Furthermore, you may incur expenses in the course of renting out your property on which you may have paid GST/HST, such as management fee, supplies, etc. Normally, you can claim this GST/HST paid on expenses as Input Tax Credits … Continue reading I rent out a residential property. What are some tax implications, with regards to sales tax?

I just bought a new house with the closing today, but my current house will be sold soon. How can I maximize deductions?

The CRA provides taxpayers with tax relief in this situation by way of the principal residence exemption. When you own two homes in a year the year or subsequent year, you can elect to have both of those homes treated as your principal residence in those years. This is because the principal residence contains ” … Continue reading I just bought a new house with the closing today, but my current house will be sold soon. How can I maximize deductions?

As a non-resident with rental property in Canada, am I required to remit 25% to the CRA?

I am a non-resident of Canada and I have a rental property in Canada. I have recently found out that I am required to remit 25% of the gross rent to the CRA as a withholding tax on a monthly basis. Can I make this payment myself? As per the CRA ruling, an individual who … Continue reading As a non-resident with rental property in Canada, am I required to remit 25% to the CRA?

When a rental property is converted into a principal residence, are there any tax implications?

When there is change in use of real estate (ex. from income-producing to personal-use), a deemed disposition occurs at fair market value (FMV). This can result in a capital gain (i.e. FMV less Adjusted Cost Base). However, in certain situations, an election under subsection 45(3) can be made to defer the capital gain by reporting … Continue reading When a rental property is converted into a principal residence, are there any tax implications?

I’m a non-resident owning rental property in Canada. I’m confused between the NR4 slip, and NR6 form.

By filling form NR6 with the CRA, your agent/tenant will only withhold 25% of the net amount of your monthly rent, versus 25% of the gross amount of your monthly rent. The NR6 form should be filed at the end of the year for the following year. For example, if your tenant pays you $3,000 … Continue reading I’m a non-resident owning rental property in Canada. I’m confused between the NR4 slip, and NR6 form.

What are my tax obligations if I am a non-resident holding rental property?

If you earn rental income from Canadian real property, you must file a Section 216 return. As a non-resident, a representative in Canada (i.e.: your tenant or property manager) will have to withhold 25% of the gross rental income paid to you and remit this amount to the CRA. The CRA will subsequently issue an … Continue reading What are my tax obligations if I am a non-resident holding rental property?

If I purchase a rental property, and I’ve never owned a primary residence, can I utilize the First time Home Buyers Plan?

Unfortunately the answer is No. One of the conditions to qualify for the First Time Home Buyers Plan is that you intend to occupy the home as your principal residence no later than one year after buying, or building it. Since your intention of buying the property is to generate rental income, you do not … Continue reading If I purchase a rental property, and I’ve never owned a primary residence, can I utilize the First time Home Buyers Plan?

If I am a non-resident of Canada, and I sell Canadian real estate, what is the procedure for filing tax returns, and paying taxes?

As a non-resident individual who sells a property in Canada, the purchaser of your property will be required to withhold 25% of the proceeds (selling price) at the time of sale ‘disposition’ (which will be given back to you). This is to give non-residents an incentive to pay tax on the capital gain/recapture that may … Continue reading If I am a non-resident of Canada, and I sell Canadian real estate, what is the procedure for filing tax returns, and paying taxes?

I’m renting out the basement of my home, and collecting rent. Should I report this on my tax return?

Definitely, yes. As per the Income Tax Act this is considered taxable income, and should be reported on your personal tax return each year. In an audit, should the Canada Revenue Agency (“CRA”) request to see your personal bank statements, the monthly rent deposits will raise a red flag, if the rental income is not … Continue reading I’m renting out the basement of my home, and collecting rent. Should I report this on my tax return?

What is the GST/HST of a new residential rental property (NRRP) rebate?

If you paid GST/HST on the purchase of a new residential rental property or substantially renovated residential rental property, you may qualify for the GST/HST NRRP rebate. If your property meets the definition of a qualifying residential unit, this rebate will allow you to receive all or a portion of the GST/HST paid on the … Continue reading What is the GST/HST of a new residential rental property (NRRP) rebate?

If I rent out part of my home while still living in it, are there any tax consequences?

If while living in your home (referred to as a principal residence) you rent out a part of it, there will be tax consequences. For tax purposes, when a principal residence is turned into a rental property, a change-in-use for tax purposes has occurred. A change-in-use means that the house will be considered to have … Continue reading If I rent out part of my home while still living in it, are there any tax consequences?

I have a rental property and for few months of this year, there were no tenants. Can I still claim rental expenses for those months on my tax return?

You can still claim rental expenses for those months as long as you were actively seeking for new tenants and the space was available for rent during the period.    

What happens if I filed an NR6 that was approved by the CRA but I did not file the section 216 return by the deadline of June 30th?

By way of background, the Section 216 Tax Return reports the net rental profits (i.e. revenues – expenses) earned on an Canadian rental property, which is owned by a Non-resident of Canada. The NR6 Form is a waiver that reduces the withholding tax rate of 25% on gross rents received by the landlord to only … Continue reading What happens if I filed an NR6 that was approved by the CRA but I did not file the section 216 return by the deadline of June 30th?

Can a non-resident who owns a Canadian rental property choose a tenant to act as his agent in Canada?

No, a tenant who is renting the property (i.e. the payer) cannot act as the agent. A professional rental agent (e.g. property manager) or a family member/friend can be chosen to perform the responsibilities of the agent as long as the individual is a Canadian resident.

How does the Home Buyers Plan repayment work?

You have to pay back the amount withdrawn from your RRSP under the HBP over 15 years beginning the second year after the year of withdrawal. Each repayment is 1/15th of the total amount withdrawn. To make a repayment under the HBP, you must make contributions to your RRSPs in the year the repayment is … Continue reading How does the Home Buyers Plan repayment work?

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