Top 10 Tax Saving Tips for Canadian Real Estate Investors

Nov. 19, 2010 - PRLog -- Top 10 Tax Saving Tips for Canadian Real Estate Investors

Toronto  | www.WorldWealthBuilders.com |


There are two things certain in life,death and taxes.Majority of Canadians do not understand the complexity of taxation."A major portion of your earning goes toward your taxes which can be as big as 46-80% of your total earnings.Knowing a little about taxes can save you huge amount of money" says Navtaj Chandhoke, founder of Professional Real Estate Investors Group (PREIG) Canada.

Here is brief description of top ten tax saving tips.These are simple guidelines and are not renered as professional advice. Your Chartered accountant can assist you professionally.


   In its T4036 Guide to Rental Income, the Canada Revenue Agency provides a number of questions you can ask yourself to help determine whether an expense is current or capital in nature. For example, you replace wooden steps with concrete steps, it's a capital expense. But if you simply repair the wooden steps, the expense is currently deductible.

   Don’t exaggerate your home office expenses. This is a red flag for the CRA. There are always exceptions, but a good rule of thumb is a maximum of 25 per cent as the business share of heat, hydro, property taxes and so on.

   Keep a careful log of car expenses. This is another red flag for CRA.
   If you run into trouble or make a mistake, call the CRA. Most times they will be very helpful, especially if you call before the crunch.
 
   Whatever you do, don’t ignore communications from the CRA, respond promptly and make notes of your conversation right on the letter for future reference.

   Unless you are incorporated you are required to complete a Statement of Business and Professional Activities (T2125) at the same time as you file your personal taxes.

   Don’t wait until the last minute. It’s impossible to get yourself properly organized under eleventh-hour time pressure and it’s difficult to make good decisions to minimize your taxes.

   Make an estimate of your expected tax bill. If your revenue is going to be high, you might consider making that machinery or computer purchase before year’s end. You’ll defray some of the expense through capital cost depreciation.

   You should set aside 30 to 40 per cent of your gross income to cover income tax and CPP.   Even if you are the only employee of your business, you are responsible for paying the employee and the employer CPP contributions.


   Keep proper records differentiating business from personal If you can’t prove it, the CRA will likely assume the expense is personal. Use the categories provided by CRA on the T2125.

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Navtaj Chandhoke is a Canadian-based real estate investor, speaker, author, educator and the founder of World Wealth Builders, leading RE investors education,mentoring, support and network of over 4545+ Canadian investors.
www.WorldWealthBuilders.com