Real Estate Accountants in Toronto | Allan CPA

Listing of Real Estate Tax Accounting Services by Madan CPA

Preparation of Personal Tax Returns for Rental Property Owners

Rental property owners often face challenges in accurately reporting rental income and maximizing deductions. Madan CPA specializes in preparing Form T776, Statement of Real Estate Rentals, ensuring:

Accurate Income Reporting: Proper documentation of rental income from all sources, including tenant payments, additional services (e.g., parking or utilities), and any pre-paid rent.

Expense Deduction Maximization: We identify and claim allowable expenses such as property management fees, repairs, utilities, property taxes, insurance, and mortgage interest.

Depreciation (CCA) Claims: Guidance on calculating and claiming Capital Cost Allowance (CCA) for depreciating property value, without triggering potential CRA reviews.

Preparation of Corporate Tax Returns for Rental Properties

Corporations that own rental properties must navigate unique tax regulations. Madan CPA provides:

Detailed Income and Expense Reporting: Creation of a comprehensive schedule for each property, tracking rental income, maintenance costs, and other expenses.

RDTOH Account Management: Careful calculation and handling of the Refundable Dividend Tax on Hand (RDTOH) to ensure proper tax credits on rental income.

Deduction Optimization: Expertise in identifying all allowable deductions to minimize corporate taxable income.

CRA Compliance: Preparation of detailed tax returns with thorough documentation to avoid audits.

Preparation of Partnership Information Returns

For real estate investor groups operating as partnerships, Madan CPA ensures compliance with tax regulations by preparing:

T5013 Partnership Return: Reporting income, losses, and deductions for the partnership.

Partner Income/Loss Slips: Generating T5013 slips for each partner, ensuring the flow-through of income or losses to individual partners.

Tax Flow-Through Structure: Advising on how partnership income is taxed at the individual level, rather than at the partnership level, to optimize tax efficiency for all partners.

Capital Gains Tax Planning

When selling real estate, capital gains tax can significantly impact your profits. Madan CPA provides comprehensive planning services to reduce your tax burden, including:

Selling Expense Documentation: Capturing all selling-related expenses such as realtor fees, legal fees, and staging costs to reduce taxable gains.

Cost Basis Adjustments: Increasing the cost basis of your property by factoring in closing costs, capital improvements, and other allowable expenses.

Corporate Capital Dividend Planning: For corporations, calculating the Capital Dividend Account (CDA) balance allows shareholders to receive tax-free capital dividends (⅓ of the capital gain is added to the CDA account and can be distributed tax-free).

CRA Submissions: Preparation and filing of Schedule 89 and director’s resolutions for capital dividends with the CRA.

Read more about Capital Gains Tax Changes here: Navigating Capital Gains Tax Changes in 2024

Designing Optimal Tax Structures for Real Estate Investments

Proper tax structuring can maximize profits and minimize risks. Madan CPA provides:

Partnership Structuring: Designing partnerships for real estate investors to simplify tax flow-through and liability management.

Holding Companies: Creating holding companies to protect personal assets, limit shareholder liability, and consolidate property ownership.

Family Trusts: Establishing family trusts for income splitting and efficient wealth transfer to the next generation.

Developer Accounting and Tax Services

Developers face unique financial and tax challenges. Madan CPA offers:

HST Return Preparation: Helping developers access refunds on VAT (HST) paid during the construction process, easing cash flow for capital-intensive projects.

Corporate Tax Returns: We ensure your corporate tax returns are accurate, compliant, and optimized to align with your development goals.

Bookkeeping Services: Detailed tracking of construction budgets, expenses, and progress reports for lenders and owners.

Compliance with Tarion and HCRA: Assistance with meeting the requirements of regulatory bodies like Tarion Warranty Corporation and the Home Construction Regulatory Authority (HCRA).

Accounting for Property Flippers

Flipping properties requires meticulous accounting for construction costs and sales. Madan CPA offers:

Construction Cost Reporting: Accurate tracking of expenses such as labor, materials, and contractor fees.

Revenue and Profit Calculation: Ensuring proper reporting of sales revenue and taxable profits to the CRA.

HST Rules Compliance: Advising on when HST applies (e.g., properties renovated more than 90%) and claiming input tax credits for HST refunds during the construction process.

Short-Term Rental Tax Services (AirBnB)

Short-term rentals like AirBnB have specific tax requirements. Madan CPA provides:

Corporate and Personal Tax Returns: Preparation of tax returns specific to short-term rental income, ensuring compliance with CRA rules.

HST Filing and Refunds: Assistance with HST filings for rentals under 30 days and claiming input tax credits where applicable.

Income Reclassification: Strategies to convert rental income from passive (taxed at 50.17%) to active business income (taxed at 12.2%) to significantly lower tax rates.

Assignment Sales Accounting

Assignment Sales involve transferring a purchase agreement before property construction is completed. In Assignment Sales, the original buyer assigns the contract to a new buyer and the new buyer purchases the property once the builder has completed construction. It is very common in the new construction industry where the time between signing the purchase agreement to the completion of construction can take several years

Profit Reporting: Accurate calculation and reporting of profits as business income.

HST Calculation: Ensuring compliance with CRA regulations for HST on assignment sale profits.

Tax Return Preparation: Filing all relevant tax returns to avoid penalties or audits.

Read more about Assignment sales here: Navigating Tax Implications of Assignment Sales

HST Rebate for Newly Constructed Rental Properties

Landlords of newly constructed properties may qualify for an HST rebate. Madan CPA assists with:

Eligibility Assessment: Determining if your property meets the criteria for an HST rebate (e.g., rented out to tenants).

Form GST-190 Filing: Accurate preparation and submission of the rebate form to claim up to $24,000.

Maximizing Refunds: Ensuring all eligible HST paid on property purchases is properly claimed.

Each service is designed with precision and expertise to ensure compliance, optimize tax outcomes, and provide peace of mind. Contact Madan CPA today for customized solutions tailored to your real estate accounting needs.