Income Tax FAQ's

[Mccree]

Originally Posted by Finner

Hey guys,

Income tax question for you. First time filing my own taxes.

I got a letter from the governemtn notifying me i had a couple thousand of tuition amounts that i could carry forward from 06. Now when i'm doing my taxes (using quicktax) how do i enter that?

Do i simply add the amounts and months together from 06 and my ones from last year (97) when i put it in? And how do i know how many full or part time months to put in??

Any help would be appreciated.

The totals from CRA that carried forward should be entered on Sch 11 near the top.

[Locke]

Originally Posted by OilersBaby

so on the investment property, you can only deduct interest on the mortgage, but not the value of your mortgage (for the tax year)?

If you're investing in 'investment' property in Canada then you will be able to deduct the mortgage interest.

However, mortgage interest on primary residence is only deductible for small businesses.

The ability for the average person to deduct their mortgage interest is a terrible idea and I hope is never adopted here.

[OilersBaby]

Originally Posted by Locke

If you're investing in 'investment' property in Canada then you will be able to deduct the mortgage interest.

However, mortgage interest on primary residence is only deductible for small businesses.

The ability for the average person to deduct their mortgage interest is a terrible idea and I hope is never adopted here.

why is it a terrible idea? i love it because it reduces your tax liability by a lot. Last tax year my husband and i didnt own a house and so our tax refund was pretty small..but we bought a house in june 2007 and when we got our refund this month, wow, it was huge! so its awesome for individuals. you dont get taxed as much!

[Jiggy]

If I am leasing a car and I use it for work, would I be able to claim the lease, insurance, etc? I do get a allowance of about $450 a month, but that only covers 60% of it.

[V]

Originally Posted by OilersBaby

why is it a terrible idea? i love it because it reduces your tax liability by a lot. Last tax year my husband and i didnt own a house and so our tax refund was pretty small..but we bought a house in june 2007 and when we got our refund this month, wow, it was huge! so its awesome for individuals. you dont get taxed as much!

It's a bad idea because it gives people a reason to not pay down their mortgage. Plus it allows them to rationalize buying something bigger than they likely should, leading them into further debt that they'll never pay off.

That's my take on Locke's comment, at least.

[OilersBaby]

Originally Posted by V

It's a bad idea because it gives people a reason to not pay down their mortgage. Plus it allows them to rationalize buying something bigger than they likely should, leading them into further debt that they'll never pay off.

That's my take on Locke's comment, at least.

well the loan officer wont let you take out a loan that you cant payoff..they look at everything you own and owe....and they check out your credit rating. i cant remember what the ratio is right now, but its very conservative (meaning sometimes even if you think you can afford it, theyll tell you you cant and deny you the loan).

[Bobblehead]

Originally Posted by OilersBaby

why is it a terrible idea? i love it because it reduces your tax liability by a lot. Last tax year my husband and i didnt own a house and so our tax refund was pretty small..but we bought a house in june 2007 and when we got our refund this month, wow, it was huge! so its awesome for individuals. you dont get taxed as much!

It is a terrible idea because if you deduct the mortgage then you pay tax on the proceeds when you sell it.

Rule of thumb - if you can deduct it on your taxes, you will need to pay tax on it when you sell it.

[Locke]

Originally Posted by OilersBaby

well the loan officer wont let you take out a loan that you cant payoff..they look at everything you own and owe....and they check out your credit rating. i cant remember what the ratio is right now, but its very conservative (meaning sometimes even if you think you can afford it, theyll tell you you cant and deny you the loan).

Bull. Part of the reason the US economy is in the tank is due in part to the sub-prime mortgage lending crisis. When times were good lending institutions had tons and tons of cash. Like any good lending institution with boatloads of dough they do what any good lender will, lend it out so you can earn interest on money that you have. How do you do that? You lend it. How do you lend someone something they dont want? Easy, make it a house. Everyone wants a house. Then make the interest rate a sweet deal. An offer they cant refuse.

At one point lending institutions were approving people for mortgages that were on welfare for christ's sake.

NINJA Mortgages. No-Income-No-Job-Approved mortgages.

Originally Posted by Bobblehead

It is a terrible idea because if you deduct the mortgage then you pay tax on the proceeds when you sell it.

Rule of thumb - if you can deduct it on your taxes, you will need to pay tax on it when you sell it.

This is true and part of my reasoning. Think about it this way; Governments require taxation revenue in order to continue functioning efficiently without incurring staggering debtloads. Some debt is good, alot of debt can be okay, too much and you're crippled.

Part of what is going on right now is that the Feds are allowing the tax-deduction of mortgage interest to every average joe. Part of this is in expectation of reaping profits on increased property values when the homes are sold. Problem is: those values arent increasing. Furthermore, those homes arent being sold.

The owners throw the keys in the mailbox and walking away, so they've been allowed to deduct their mortgage interest for 'X' number of years and now there are no capital gains resulting from a sale to recoup the money.

But they've already spent the money they thought they were getting. So they're in a bit of trouble. Of course theres lots more to this, but this is a general drift.

[Slava]

Well there are ways that you can legally write off the interest you pay on your mortgage each year in Canada. This is a different system than what is used in the US, and there are a lot of factors.

It doesn't involve taking on anymore debt than you already have, although there is some increase in risk to implement a strategy like this. Honestly this is not something that someone should just do on their own. You should have someone who knows what they are doing setting this up for you and helping you to monitor things and make sure that it remains on track.

[OilersBaby]

Originally Posted by Bobblehead

It is a terrible idea because if you deduct the mortgage then you pay tax on the proceeds when you sell it.

Rule of thumb - if you can deduct it on your taxes, you will need to pay tax on it when you sell it.

i think you only pay taxes if you sell within 2 years of owning it. otherwise you dont pay taxes on the proceeds. thats the law in california at least.

[OilersBaby]

Originally Posted by Locke

Bull. Part of the reason the US economy is in the tank is due in part to the sub-prime mortgage lending crisis. When times were good lending institutions had tons and tons of cash. Like any good lending institution with boatloads of dough they do what any good lender will, lend it out so you can earn interest on money that you have. How do you do that? You lend it. How do you lend someone something they dont want? Easy, make it a house. Everyone wants a house. Then make the interest rate a sweet deal. An offer they cant refuse.

At one point lending institutions were approving people for mortgages that were on welfare for christ's sake.

NINJA Mortgages. No-Income-No-Job-Approved mortgages.



This is true and part of my reasoning. Think about it this way; Governments require taxation revenue in order to continue functioning efficiently without incurring staggering debtloads. Some debt is good, alot of debt can be okay, too much and you're crippled.

Part of what is going on right now is that the Feds are allowing the tax-deduction of mortgage interest to every average joe. Part of this is in expectation of reaping profits on increased property values when the homes are sold. Problem is: those values arent increasing. Furthermore, those homes arent being sold.

The owners throw the keys in the mailbox and walking away, so they've been allowed to deduct their mortgage interest for 'X' number of years and now there are no capital gains resulting from a sale to recoup the money.

But they've already spent the money they thought they were getting. So they're in a bit of trouble. Of course theres lots more to this, but this is a general drift.

yeah thats all true..but i think financial institutions have learned from their mistakes and are now mroe conservative in terms of giving loans etc to people and making it more difficult to get loans without down payments etc. it is becoming more difficult for people to get house loans than it was a couple of years ago. however if youre responsible like my husband and i, the benefits are fabulous. I loved our tax return!! it benefits the INDIVIDUAL if you do it right! I guess that's the difference here...I was thinkign how good it is for my husband and I compared to if we lived in Canada. Yeah I know there are all these issues and everything with people who get mortgages and cant pay them...but that's their problem. I dont care what happens to anyone else..it benefits me. Welcome to the American way

[V]

I suppose this crisis, and the recession that's followed hasn't impacted the value of your house whatsoever...

[Cube Inmate]

Originally Posted by V

I suppose this crisis, and the recession that's followed hasn't impacted the value of your house whatsoever...

Recession? Where are you getting your news? Oh...from the mass media who want us all to believe that the US is in a recession.

Through Q3 2007, the US economy continued to grow, with the per-capita GDP increasing continuously with the exception of a slight drop between Q4 2006 and Q1 2007 (data here). There is no recession, as much as the mainstream media would like you to believe that Bush has caused one.