Is there anyone who doesn’t like to own an apartment or a property that helps generate a steady rental income? No, right? After all, owning assets that produce income is always a far better option than having the ones that only generate expenses. Did you know, that today, rental income is one of the most common sources of income? With so many renters looking for apartments for rent in Canada or elsewhere, landlords have the perfect opportunity to earn lots of money by renting out their properties. Having said that, if you own a rental property, you may have to pay taxes on that rental income. Tax on rental income is collected directly from landlords and is calculated by multiplying the applicable tax rate to the assessed value of the property.
However, no one likes to pay property taxes. And, if you, too, are looking for a way to reduce these taxes, claiming rental property tax deductions can be the best way for you. In this blog, we will discuss some of the most effective ways to reduce your property taxes. Keep reading till the end.
Top 4 Tax-Saving Tips that Every Landlord Should Know About
There are many ways that can help landlords to reduce their tax bills as well as avoid them altogether. Some of them have been mentioned below.
- Invest in Your Properties
Should you want to see the value of your portfolio rise as well as avoid hefty stamp duty charges, invest in your existing properties. For instance, if you are a resident of Kelowna or nearby areas, you can upgrade your house rentals in Kelowna. Repair and maintenance costs such as repairing gutters, fixing the roof, cleaning HVAC filters, replacing broken doorknobs, fumigation, and painting qualify for the deduction. Whether you choose to hire professionals or do it yourself, you can deduct any expenses for tools and equipment.
- Exclude Maintenance Charges from the Rent
Another way through which you can easily save tax is by excluding maintenance charges from the rent received. We all know that many landlords take maintenance charges from tenants. Maintenance charges typically include all the necessary costs needed to maintain the property. Some landlords include these charges in the rent which increases the whole rent amount. So, should you want to save money on tax, don’t forget to exclude the maintenance charges For this, you just have to add one line in the rental agreement stating that tenants can pay all maintenance charges directly to the society association.
- Don’t Hide Your Expenses
If you want to lower your property tax bill, we would recommend you claim everything you are entitled to. In addition to keeping every receipt, get in touch with your accountant or tax advisor and find out what you can and cannot claim.
Should you be located in Kelowna or nearby areas and are looking for a company that can help you find ideal tenants, reach out to Homefinders. With the help of our pre-screened tenant database, you will find a wide list of tenants who are looking for homes for rent in Kelowna.
- Use All the Available Tax Bands
If you are married, you can use tax bands to cut your tax bill. By transferring your assets to your spouse, you won’t have to pay the ‘Capital Gains Tax’ or any stamp duties. Why? Well, that’s because, if your spouse’s tax bracket is more economical than yours, you’ll pay less tax on your property.
The Bottom Line
Should you want to maximize your profit, taking advantage of every tax deduction is very important. Apart from these, there are many other tax-saving tips for landlords. Some of these include purchasing a joint property, opting for short-term occupants, and more. Should you be looking for a company that can help you find the best tenants for your home rentals, reach out to us. At Homefinders, we not only help tenants looking for the right apartments for rent in Canada but also provide landlords with the best platforms to advertise and manage their rental listings. To get in touch with us, call @ 250-899-8133.