Quote:
Originally posted by jcody@Dec 22 2004, 04:50 PM
there's also another side to being a slum lord...You are now paying taxes on the 'income' earned ie. the rent collected. Also, when you do go to sell the property, because it is no longer a prinicple residence, you will have to pay capital gains on a portion of the sales price. There are some definite upsides, but also some downsides. The alberta tenant act is very vigorous in protecting tenants, so If you get a bad one, it is very difficult to get them out in short order, usually 30 day min, giving them lots of time to get 'their money's worth' out the damage deposit. Big thing now is grow ops, insurance company's are refusing to cover damages caused by any grow op now, and law enforcement are contemplating charging property owners who have tenants that run grow ops, they want more periodic visits by the owner
jc
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I don't get people who use that TAX argument. If I gave you $10,000 but you had to pay $2000 in taxes would you not prefer that to not having anything? There are ways to minimize the tax you pay as well. You can start a corporation and out the income directly into the corporation. I beleive if you reinvest the profits into other investment you can also defer the tax payments. Best thing is to check with a good accountant. If you have lived in the house for more than a year I don't think you have to pay capital gains tax either.
The most difficult part about renting your house for a lot of people is getting approved for 2 mortgages. Many people won't qualify to have 2 mortgages that they are responsible for. If you go a month or two with no tenants you have to pay 2 mortgages and your bank will look at that.
If you have the ability to pull it off though it is a GREAT way to make some cash.