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Date: October 14, 2022
Have you considered claiming a tax deduction on your rental property? Wales Accounting has compiled a short list of a few things you should keep in mind about income tax filing before doing so. But, you should be aware that claiming a deduction now may include tax liability in the future, as well, you should always keep an accurate record of all property-related expenses. Before you make a decision, follow these tips below or connect with our team.
Rental Property Tax Deductions Defined
In short, a tax deduction is an item that you can subtract from your income in order to lower the amount of total taxes that you owe. With rental property tax deductions, you can reduce the amount of taxes you owe by claiming a deduction. In order to explore your options, we have gathered here a few common rental properties’ key deductions for you to learn about.
1. Mortgage Interest
If you have a loan on our rental property, you can be eligible to deduct some of the interest that you pay on the loan from your taxable income. In fact, this is one of the biggest tax deductions available if you are a rental property owner. Since you can save a great deal of money, this option is worth exploring.
2. Depreciation
Another area where you may be eligible for deductions is your depreciation. When you depreciate your property, a portion of that cost can be deducted from your taxable income each year. If you are looking to see if you qualify, this option should be further looked into.
3. Expenses
In order to make a deduction on expenses, it’s important to keep track of all your expenses. This includes repairs, insurance, maintenance, and more. There are a variety of expenses that you are able to deduct from so start keeping track of each expense now.
4. Losses
To help save you money in the long run, did you know that if your rental property incurs a loss, you may be eligible to deduct that loss from your taxable income? This is true, and this option is definitely worth your attention.
5. Tax Credits
Tax credits can save one a significant amount of money on taxes. If you are a property owner, it’s important to do some research on this to see how it works. You can also talk to a tax professional to see which tax credits you are eligible for.
How We Can Help
Our team at Wales Accounting always recommends to our rental owners keep a record of all expenses that their property incurs. These types of documentation could include invoices, receipts, or any other record that lists the payment of the transaction. This is because, without proper documentation, the CRA will not allow anyone to claim their expenses. If you start keeping track of these documents now, you will have immediate access when you need them.
If you have additional questions or inquiries about rental property tax deductions in Richmond Hill, our team would be happy to speak to you. Contact us at (905) 508-9262 today.
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