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My question is: Canadian-specific QUESTION: Hi, If I rent out my principal residence for a few months, or up to a year, how do I account for the income and the expenses? Does the option exist to not claim rental expenses and not include rental income as this is a sub-let of a principal residence? Or, is it necessary to account for all income and deduct taxes, insurance and interest expenses. Thank you! JG --------------------------------------------------------------------------- I am sure that I have answered a question of yours before but durned if I could find it to compare.
The law is clear. You HAVE TO report the rent. You
do NOT have to claim the expenses but if you do not, you will end up paying tax
on profits you did not make.
Therefore, you should get hold of form T776 and fill out a
rental schedule.
T776 can be found at:
http://www.ccra-adrc.gc.ca/E/pbg/tf/t776/t776-01e.pdf
You should also attach a note to your return stating something
to the effect:
"I hereby elect under section 45(2) of the
Income Tax Act to claim this house as my principal residence even though I am
not normaly living in it."
__________________________
(your signature)
This election is valid for 4 plus one years if you just decide
to rent for a while and is unlimited if you are renting your house as a result
of a transfer.
You will then have to fill in form T2091 to claim the
principal residence designation when you sell it. This form can be found at:
http://www.ccra-adrc.gc.ca/E/pbg/tf/t2091_ind/t2091_ind-02e.pdf
David Ingram - www.centa.com the CEN-TA Group US / Canada / Mexico Income Tax and Working Visa Matters 108-100 Park Royal South West Vancouver, BC, CANADA V7T 1A2
(604) 913-9133 Fax (604) 913-9123
Cell (604) 657-8451 10 AM to 10 PM 7 days a week |
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