Rental Income/Expenses

[Eagle Eye]

Hopefully someone out there knows the answer to this question.

I understand the bulk of what I can claim against my rental property as expenses (maintenance, interest, utilities, supplies, etc), but what I am wondering is if I am allowed to claim food and meal expenses due to the travel to get to my rental property?

What line would I claim it under? Travel or other?

Thanks in advance

[bizaro86]

How far away from your residence is your rental property? Is this the type of travel that requires an airplane, or the type of travel that requires a 5 minute drive.

I've never claimed vehicle expenses against rental income, because the few short drives I make per year wouldn't provide enough tax savings to justify keeping the log. (IMO)

You can't deduct meals where you don't have a business purpose, the fact that you have to eat while you're doing rental property stuff isn't even close to meeting the standard. And business meals and entertainment (for the purposes of entertaining clients, for example) are only 50% deductible.

If you're really struggling for tax deductions against a rental property, you could start claiming depreciation. (CCA)

[Eagle Eye]

Originally Posted by bizaro86

How far away from your residence is your rental property? Is this the type of travel that requires an airplane, or the type of travel that requires a 5 minute drive.

I've never claimed vehicle expenses against rental income, because the few short drives I make per year wouldn't provide enough tax savings to justify keeping the log. (IMO)

You can't deduct meals where you don't have a business purpose, the fact that you have to eat while you're doing rental property stuff isn't even close to meeting the standard. And business meals and entertainment (for the purposes of entertaining clients, for example) are only 50% deductible.

If you're really struggling for tax deductions against a rental property, you could start claiming depreciation. (CCA)

Property is a 3 hour drive from my house, I make about 4 trips a year to re-supply the condo (short term rentals). Right now I am just claiming the fuel that it takes to drive out there, I was just wondering if I am maxmizing my return.

When I look at the CRA's website regarding filing a T776 the list of expenses not allowed to be filed is rather short and doesnt provide much detail.

Thanks for the info.

[Eagle Eye]

Just to add, this is the description of Line 9200 of the T776 form.

Line 9200 - Travel
You might travel to collect rents, supervise repairs, and manage your properties. To claim the expenses you incur, you need to meet the same requirements discussed at Line 9281 - Motor vehicle expenses. Travelling expenses include the cost of getting to your rental property. Travelling expenses do not include board and lodging, which we consider to be personal expenses

I guess I get my answer here when they mention 'Board'

[Brotato]

Originally Posted by Eagle Eye

Just to add, this is the description of Line 9200 of the T776 form.

Line 9200 - Travel
You might travel to collect rents, supervise repairs, and manage your properties. To claim the expenses you incur, you need to meet the same requirements discussed at Line 9281 - Motor vehicle expenses. Travelling expenses include the cost of getting to your rental property

based on what you've said you claimed "fuel costs" and what T14036 says:
"You cannot deduct motor vehicle expenses you incur to collect rents. These are personal expenses." You have already made an uneligible claim by claiming fuel, assuming you have one rental property, I believe.

If you're trying to maximize your claims, be very careful as there is a limit on 1 rental property versus 2+ vis-a-vis what you can claim - a good tax advisor will help you here. Even if you just spend the money this year, next year you will have a better understanding of what you can and cannot claim.


edit: I glazed through your comments - I guess you're not travelling to pick up rent but for maintenance, etc. I think you're still hoped and can't claim fuel or anything due to this requirement on 1 rental property:

you receive income from only one rental property that is in the general area where you live;

I don't think the CRA will allow you to claim that a place 3 hours away meets this criteria, but that's my opinion.

[Eagle Eye]

Originally Posted by Brotato

based on what you've said you claimed "fuel costs" and what T14036 says:
"You cannot deduct motor vehicle expenses you incur to collect rents. These are personal expenses." You have already made an uneligible claim by claiming fuel, assuming you have one rental property, I believe.

If you're trying to maximize your claims, be very careful as there is a limit on 1 rental property versus 2+ vis-a-vis what you can claim - a good tax advisor will help you here. Even if you just spend the money this year, next year you will have a better understanding of what you can and cannot claim.


edit: I glazed through your comments - I guess you're not travelling to pick up rent but for maintenance, etc. I think you're still hoped and can't claim fuel or anything due to this requirement on 1 rental property:

you receive income from only one rental property that is in the general area where you live;

I don't think the CRA will allow you to claim that a place 3 hours away meets this criteria, but that's my opinion.

Maybe it is just a wording thing here, but I am not travelling to collect rents, I am travelling to do maintenance, re-supply the condo (we rent out short term at a ski resort so we supply all items as a hotel would).

Might not be worth the hassle anyways, as we are only talking about a few hundred bucks being claimed as fuel

[Locke]

You have to have more than one property to be eligible for any travel expenses regardless of how far away your rental property is.

My invoice is in the mail.

[Eagle Eye]

nm

[Brotato]

Originally Posted by Eagle Eye

If you own one rental property:

You can deduct reasonable motor vehicle expenses if you meet all the following conditions:

• you receive income from only one rental property that is in the general area where you live;
• you personally do part, or all, of the necessary repairs and maintenance on the property; and
• you have motor vehicle expenses to transport tools and materials to the rental property.
  
  You cannot deduct motor vehicle expenses you incur to collect rents. These are personal expenses.

Here is says if you have one you have to meet all 3 conditions, now I am not sure what the defintion of general area is (assuming 3 hours drive isnt, haha)

That's what I said. I don't expect you'll get any better comments here - What you're doing is taking away $$$ from people who do this sort of work for a living. Somehow people think it's acceptable to post threads saying "someone give me free advice that is valuable and generally costly to obtain", but you never see people posting stuff like "someone come paint my baby's room for free"

There's zero difference in what you're asking (asking people who normally charge to give their services for free) yet somehow one seems acceptable, while the other isn't.

My $0.02 - I don't mean to attack you, eagle eye, but as professional who also has 'information deliverables', I wouldn't be thrilled to ask to provide them free of charge either. Hopefully you have your general answer, and if you need more information apparently Lockke can invoice you for more detailed work?

[Brotato]

Originally Posted by Eagle Eye

If you own one rental property:

You can deduct reasonable motor vehicle expenses if you meet all the following conditions:

• you receive income from only one rental property that is in the general area where you live;
• you personally do part, or all, of the necessary repairs and maintenance on the property; and
• you have motor vehicle expenses to transport tools and materials to the rental property.
  
  You cannot deduct motor vehicle expenses you incur to collect rents. These are personal expenses.

Here is says if you have one you have to meet all 3 conditions, now I am not sure what the defintion of general area is (assuming 3 hours drive isnt, haha)

I didn't mean to sound spiteful in my previous post - but bolded is what you need a trained tax guy's advice for. He can tell you what CRA case law and technical bulletins, etc... say regarding CRA's interpretation of "general area".

[Eagle Eye]

Totally understand, I appologize was just hoping to get advice, but now realize that it was a lot more than just advice.

Thanks for the help all, I think I learned to hire a professional would be the best way for me to move forward.

[Brotato]

Originally Posted by fotze

Don't feel bad. It is a good idea to hire a professional and it is a good idea to ask things on a message board, even if some people make their living in that industry.

When people ask for home reno advice, lots of people will give advice because even though contractors charge for their expertise, many others have done it themself and would be glad to share their thoughts.

If someone posted about how to dewater a gas well, I would probably post my techniques, even though people charge out $1000 for that expertise. That is an information deliverable.

Hell, you posting this and locke giving advice may have actually given locke business (if he even needs it). To not post this question defeats the purpose of this place. Slava gives out advice free of charge, the mortgage folks do, troutman does, the realtor does. IT probably is good for them in the long run, and if it isn't then its their choice, plus it is satisfying talking about something you are an expert at.

Totally agree with you, fotze. I didn't mean to come off quite as "black and white" as I did. Queries like this can definitely generate business, but too much can also drive away business. I think we can all agree it's a grey area but I would definitely encourage people to ask - If it's too in depth I am sure experts like Lokke will be able to help them further in "real life" .

Again, my apologies Eagle Eye.

[Red]

Why not get a property closer to where you live? Not sure how you came about getting this one, but it sounds like a lot of unneccessary travel etc.

[photon]

Originally Posted by Red

Why not get a property closer to where you live? Not sure how you came about getting this one, but it sounds like a lot of unneccessary travel etc.

The location of the mountains might have something to do with it (sounds like it's a ski condo)

[Locke]

Originally Posted by Red

Why not get a property closer to where you live? Not sure how you came about getting this one, but it sounds like a lot of unneccessary travel etc.

Its actually very common for Albertans to have ski condos either here or in BC, but ski condos dont always follow the same rules as regular rentals as they also incorporate personal use and they're seasonal.

[bizaro86]

Originally Posted by fotze

If someone posted about how to dewater a gas well, I would probably post my techniques, even though people charge out $1000 for that expertise. That is an information deliverable.

I recommend leaving the gas well loaded up at current gas prices, and planning to install a plunger lift sometime around 2020.

[Brotato]

Originally Posted by Locke

Its actually very common for Albertans to have ski condos either here or in BC, but ski condos dont always follow the same rules as regular rentals as they also incorporate personal use and they're seasonal.

Some more truth! If you're writing off the entirety of a ski condo that you use "you're doing it wrong". Yet another reason to hire this guy.

[ranchlandsselling]

Okay, since this is the free accounting advice thread related to real estate - I'm thinking about incorporating and don't really know how to go about doing it or even if I should. The company will likely hold real estate (single family/condo/multifamily) as well as real estate services, earn money working from a brokerage etc.

Right now I earn commissions directly to myself and expect to have to rent out a house I own in the future. I was thinking about hanging onto said house for awhile and perhaps longer and buy more. Ideally if I'm incurring expenses to do said activities I'd like a way to write them off, same with car, home office, etc.



Any suggestions

[onetwo_threefour]

^ Talk to a lawyer....

[squiggs96]

Originally Posted by ranchlandsselling

Okay, since this is the free accounting advice thread related to real estate - I'm thinking about incorporating and don't really know how to go about doing it or even if I should. The company will likely hold real estate (single family/condo/multifamily) as well as real estate services, earn money working from a brokerage etc.

Right now I earn commissions directly to myself and expect to have to rent out a house I own in the future. I was thinking about hanging onto said house for awhile and perhaps longer and buy more. Ideally if I'm incurring expenses to do said activities I'd like a way to write them off, same with car, home office, etc.



Any suggestions

As a CA, with real estate investments personally, I'd suggest talking to a tax planner. Any advice on a forum would be incomplete and would be able to asses all factors.

As a general note, you don't need to have a corporation to write off expenses. There are many advantages and disadvantages of a corporation, partnership, joint venture and sole proprietorship, but a tax planner would be able to answer your questions. Spend a few hundred now and save yourself many dollars later.