Quote:
Originally Posted by squiggs96
Quick example with annual totals:
Rent $12,000
Interest charges $6,000
Property taxes $2,000
Other expenses $1,000
Earnings $3,000
Take amortization equal to earnings of $3,000 to reduce rental income to nil. (Side note: you cannot create a loss by taking more amortization than your earnings figure.)
Here you have positive cash flow, dependent on your mortgage, and positive earnings that get reduced by amortization to have no rental income to report. Yes you have to report all your activity on your T1 (if held personally), but there are no taxes payable because of it. When you sell your place there will likely be capital gains and recapture on the amortization, but I'd rather pay the taxes at that time, when I have positive cash flow from the sale.
It's likely just my preference, but I wouldn't use the word maneuvering. Instead I'd choose planning. You are allowed to take full advantage of the tax laws. Any fees paid to help with the set up of turning a residence into an income property are also usually deductible against your income.
|
How does that help him pay for the new place?
To quote Seinfeld about Kramer:
"it's easy to not pay income taxes when you have no income"
In the end I think you just re-confirmed what I told CS. Renting the condo out will not help you much, if at all.