Tax Time – Income & Expense Categories

As we approach the end of tax season, hopefully you haven’t procrastinated.  For you tax filers (early or late) with income property, today we are going to discuss income & expense categories to include when filing your return for an income property.

As a person with income properties, for each property, you will file a form called a “Statement of Real Estate Rentals”. On this form you are basically showing what your net taxable rental income is for that property, for the year.  To come up with this net income amount, you must provide your rental income for the year and subtract all related expenses. But what items should be included in these calculations?

Income

1. Rent – all rents for your property.
2. Parking Income – any parking fees charged.
3. Laundry Income – any laundry fees charged.
4. Other Income – ie. solar panel income or other miscellaneous income.

Total these income items up and you come up with your Gross Rental Income.

Expenses

1. Advertising – any expenses related to advertising the property for rent.
2. Insurance – any expenses related to insuring the property.
3. Interest – any expense incurred by borrowing to acquire the rental income.  Most notably the mortgage interest.
4. Office Expenses – ie. office supplies.
5. Legal, Accounting & Professional Fees – any expenses related to hiring a professional in running the property, ie. bookkeeping.
6. Management/Admin fees – ie. expenses related to hiring a property manager.
7. Maintenance & Repairs – ie. fixing broken window, snow removal.
8. Salaries, Wages & Benefits – any employees you pay to run your properties.
9. Property Taxes – city property tax paid.
10. Travel – any travel costs to acquire/sell/manage a property
11. Utilities – any utility costs paid by the landlord.
12. Motor Vehicle Expenses – you are allowed to deduct vehicle expenses directly related to driving for purposes of managing the property. This is a grey area and detailed records should be kept for proof.
13. Other Expenses – any other expenses not mentioned above.

Total these expenses to come up with your Deductible Expense Total.

Taking your gross rental income minus your deductible expense total will give you a net income (loss) before adjustments. At this point you are able to deduct your CCA allowance (depreciation) to come up with your net income. This net income amount will be added to your other income sources for the year for tax purposes.

What has been your experience with the Statement of Real Estate Rentals Form?