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My question is: Canadian-specific
QUESTION: I plan to purchase a rental condominuim and rent it to my parents.
Is the rental income from my parent tax deductible.
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david ingram replies.
First of all, I have received something like 40 of the Free questions in the last week. Few are simple, most are complex. And some new responsibilities with my children have taken away my time.
I am adding all the questioners to the list and I look back to find another question to answer when I do.
For this questioner, I think the question was - Can I write off the rental expenses. The "income" is never deductible.
The answer to that can be found at www.centa.com click on Tax Guide on the left and then click on Rental Income. You will find all sorts of rental hints and some sample tax cases including the next two:
In 1989, Virginia Maloney was turned down by Judge Mogan of the Tax Court of Canada. She had rented her house to her mother. The rent charged was not realistic with regard to the cost of and the maintenance to keep up the property. Ms Maloney had charged her mother $100 rent in 1984 with $4,600 of expenses and $1,800 rent in 1985 with $11,000 of expenses. See Special Problems below.
and in 1990, Michel-Guy Huot was also turned down for a deduction when he rented a house to his parents for less than market value. Judge Garon of the Tax Court of Canada ruled that the taxpayer "Had failed to establish that the rental expenses were incurred in order to earn income." Because of the low rent and the uncertainty of their stay, there was no "expectation of profit." (See Expectation of Profit Section at back of book for more information on this subject."
The Expectation of Profit part no longer exists if there is no personal reason behind an investment. Expectation of Profit DOES EXIST if there is a personal factor in the rental such as a time share, a partial use Whistler condo, OR a rental to a parent.
BLOWING OUR OWN HORN
By the way, if you type the words - income tax experts = into google, today, we come up number "8" out of 612,000 possibilities in the world - i.e. same answer in Saudi Arabia of Australia..
If you take the "s" off the experts and make it - income tax expert - we are number 2 out of 495,000.
And if you ad in US Canada Mexico to have - income tax expert us canada mexico - we are numbers one and two out of 27,000. Now "THAT" is positioning!
They are hitting different parts of our new site. Hit on either one of them and you will see the changes Richard Pitt has been making to the appearance and touch and feel of the CEN-TA Site, which Richard started putting together in 19"8"6 before there was an internet.
Sort of an endorsement / advertisement
Richard was the co-owner of WIMSEY INFORMATION SERVICES, which had the honor of being the first Commercial ISP in Canada. You may remember "way back when" when Mark Schneider on CTV would sign off as [email protected] and Province Business Editor Ken Bell was [email protected]. Go through your old address book and you will find most of your first addresses in 1992 / 93 were wimsey.com addresses.
All of us forerunners in the information age used Wimsey and if anyone wants help for positioning or new hosting or, or, or - call Richard Pitt at 604-644-9265
David Ingram of the CEN-TA Group
US / Canada / Mexico tax and working Visa Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 913-9133 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
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