Be careful with your rental income tax write off
Claim your rent cheque but be wary
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With mortgages so high today, a lot of people rent out part of their homes. Putting up with any late-night tenant noises is a hassle, but the upside is writing off part of your house. So let’s say you decide to rent out your basement to help make ends meet—you can deduct about one-third of your mortgage, utilities, property tax, insurance and any other rent-related expenses. To make this work, you’ll have to claim that rent cheque on your income taxes. Plus, you can’t make any structural changes to your home, and the part of the home used for rental purposes must be small in relation to the size of your whole property (like a basement is). Otherwise, you’ll have to report a capital gain based on the portion of the house that was rented.
The bottom line: Carefully follow the CRA’s rules and claim the entire amount of any rental-related expenses at home.
More tax tips here.
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