Or they will have an off-the-record conversation on things that you may do that they couldn't easily detect. I agree, they won't help you cheat but if you hand them books that are missing some cash transactions for instance, how are they to know that they were not properly accounted for? I am not advocating for this, I keep things clean because I don't want to deal with the hassle but I know not all do.
My dads an accountant, one of his deadbeat clients ran a chain of successful restaurants, he told her to play it straight, pay her little 30-40k in taxes she owed, she didnt, CRA audit and investigation later, she now owes 600k+ and they got her by the balls
A client of my accountant did catering and got a number of cash jobs. He paid the employees in cash but got into collecting credit card points on just about everything else. The CRA picked up on how much he was spending on his credit card and when it wasn't reasonable for his revenue they slammed the door on his fingers. All for reward points.
me; how much did I make,
my accountant; how much did you want to make?
a good accountant can save you thousands in taxes , and thousands more if audited. If it wasn't lucrative there wouldn't be lawyers that only do tax law.
So many dummies think the guys at Rev Can , cant be that bright. Give ones of those dogs a buried bone and watch them dig.
Bump.
If anyone wants to share a referral for the tax accountant it would be appreciated, since I be clueless and have many questions.
Essentially we own a rental property that we lived in between 2008-2013, then bought a house and have rented the condo ever since. It has about 4 yrs/$40k left on the mortgage, when it comes up for renewal in Feb 2021. We aren't sure if we should pay the 4 years and finish up the mortgage or if there is any benefit to stretching out that final $40k over another 15-20 years with a super small monthly payment. We have no current plans to sell it and have often thought that we would move back into it when we retire.
In this condo we currently have a tenant who just gave us his notice, since he just bought a house. We've basically kept the rent unchanged for the last 7 years, so he was getting a steal of a deal on rent, but we didn't mind since he was an excellent tenant and it helped him save money to buy his house. Over the 7 year period we were losing about $100 month in operating costs.
So I'm not sure if dropping our mortgage payment (while raising the rent for our new tenant) will cause an income tax hit for us, because we will become cash flow positive each month by a fair amount. Or maybe being cash flow positive has nothing to do with any of this. Or what the best financial decision is to make here with different options available on how to move forward with the mortgage. Or if there is anything else we aren't thinking about to minimize tax implications.
If your condo had a mortgage, any income you received sould be offset by the interest being paid on that mortgage.
If your house in Mississauga isn't paid off, I'd be re-mortgaging the rental to pay off your primary residence. Then whatever you make on the next tenant goes up in smoke... no income generated, but it's an appreciating asset.
Bump.
If anyone wants to share a referral for the tax accountant it would be appreciated, since I be clueless and have many questions.
Essentially we own a rental property that we lived in between 2008-2013, then bought a house and have rented the condo ever since. It has about 4 yrs/$40k left on the mortgage, when it comes up for renewal in Feb 2021. We aren't sure if we should pay the 4 years and finish up the mortgage or if there is any benefit to stretching out that final $40k over another 15-20 years with a super small monthly payment. We have no current plans to sell it and have often thought that we would move back into it when we retire.
In this condo we currently have a tenant who just gave us his notice, since he just bought a house. We've basically kept the rent unchanged for the last 7 years, so he was getting a steal of a deal on rent, but we didn't mind since he was an excellent tenant and it helped him save money to buy his house. Over the 7 year period we were losing about $100 month in operating costs.
So I'm not sure if dropping our mortgage payment (while raising the rent for our new tenant) will cause an income tax hit for us, because we will become cash flow positive each month by a fair amount. Or maybe being cash flow positive has nothing to do with any of this. Or what the best financial decision is to make here with different options available on how to move forward with the mortgage. Or if there is anything else we aren't thinking about to minimize tax implications.
As for referrals, I'll send you a decent guy with very fair rates through a PM.
There is no advantage to paying off the mortgage, it might be a tax disadvantage since financing costs are deductible against the income from rents. The smarter move would be to mortgage/HELOC your condo to the tits and use those funds to pay down any other debts you may have then use what's left to pay down the mortgage on your personal res. That maximizes your tax deduction, might minimize your financing costs as rates today are very low, and maintains the same debt load. If you don't need all that to pay off your personal residence mortgage, just buy more bikes.
Never worry about paying more taxes. When you pay more tax you are always putting more cash in your jeans.
As for minimizing tax, increasing the mortgage on the condo will help, tracking expenses for the condo carefully is important too. Finally, having someone help with tax and investment planning is always wise if you have income from more than aa single employer.
Bump.
If anyone wants to share a referral for the tax accountant it would be appreciated, since I be clueless and have many questions.
Essentially we own a rental property that we lived in between 2008-2013, then bought a house and have rented the condo ever since. It has about 4 yrs/$40k left on the mortgage, when it comes up for renewal in Feb 2021. We aren't sure if we should pay the 4 years and finish up the mortgage or if there is any benefit to stretching out that final $40k over another 15-20 years with a super small monthly payment. We have no current plans to sell it and have often thought that we would move back into it when we retire.
In this condo we currently have a tenant who just gave us his notice, since he just bought a house. We've basically kept the rent unchanged for the last 7 years, so he was getting a steal of a deal on rent, but we didn't mind since he was an excellent tenant and it helped him save money to buy his house. Over the 7 year period we were losing about $100 month in operating costs.
So I'm not sure if dropping our mortgage payment (while raising the rent for our new tenant) will cause an income tax hit for us, because we will become cash flow positive each month by a fair amount. Or maybe being cash flow positive has nothing to do with any of this. Or what the best financial decision is to make here with different options available on how to move forward with the mortgage. Or if there is anything else we aren't thinking about to minimize tax implications.
My accountant is great but I'm annoyed with him. Really knows his stuff and answers questions well, but doesnt get around to the necessary paperwork.
Do you own the condo personally or is it in a corporation? Do you have kids? It may be worth the thought exercise to see if giving it a legally separate owner makes sense in your situation. It would trigger a capital gain but in a down market, less of a hit than a year ago. If the condo has a different owner you get to pick when the money comes out ad income for you. I know some people.leaving the money in to withdraw during an epic trip (where your income would be low because you are travelling for a long time) or after retirement. The money could also be used to buy other properties.
@Mad Mike would love the referral for a tax accountant - thank you. Our house still has a good chunk of change owing - maybe around $300k, but we have zero other debts for either of us.
@GreyGhost Yes we own the condo - technically my wife owns it, because I sold my condo to buy the house we live in now. No kids currently, unless we decide to adopt/foster. Since the condo is so close to being paid off this got me thinking that maybe using the equity to take out another mortgage and buy another property is a good investment.
@matt365 What you just suggested is actually what a close friend also suggested to us, which got me thinking about all this.
Careful with using the condo to remortgage and pay off personal debts....that’s when it gets into good accountant territory as you technically shouldn’t mix the two.
now....remortgaging and buying another investment property....now you’re utilizing the full capacity of that condo to build additional equity.
money from investments for reinvesting and growing business good...
money from investments to pay off your own personal debts....bad....very good accountant needed.
Bump.
If anyone wants to share a referral for the tax accountant it would be appreciated, since I be clueless and have many questions.
Essentially we own a rental property that we lived in between 2008-2013, then bought a house and have rented the condo ever since. It has about 4 yrs/$40k left on the mortgage, when it comes up for renewal in Feb 2021. We aren't sure if we should pay the 4 years and finish up the mortgage or if there is any benefit to stretching out that final $40k over another 15-20 years with a super small monthly payment. We have no current plans to sell it and have often thought that we would move back into it when we retire.
In this condo we currently have a tenant who just gave us his notice, since he just bought a house. We've basically kept the rent unchanged for the last 7 years, so he was getting a steal of a deal on rent, but we didn't mind since he was an excellent tenant and it helped him save money to buy his house. Over the 7 year period we were losing about $100 month in operating costs.
So I'm not sure if dropping our mortgage payment (while raising the rent for our new tenant) will cause an income tax hit for us, because we will become cash flow positive each month by a fair amount. Or maybe being cash flow positive has nothing to do with any of this. Or what the best financial decision is to make here with different options available on how to move forward with the mortgage. Or if there is anything else we aren't thinking about to minimize tax implications.
Not sure how you have been handling the last 7 years and it’s not something that should necessarily be discussed on a public forum.
If you started off correctly, you had an appraisal of the property at the time it became a rental property. This is important for two reasons. Firstly, to set the property value for the CCA deduction against rental income. Secondly, to set the starting/purchased value used for the capital gain calculation on disposition of the property (if you sell), or deemed disposition of the property (if you move back in) at some future point in time.
Something to take into consideration that may not have been previously mentioned...if you are going to re-mortgage the rental property to pay down the mortgage on your primary residence, make sure you are aware of the conditions of paying down the home mortgage so that you don’t end up paying any unnecessary fees or penalties.
A client of my accountant did catering and got a number of cash jobs. He paid the employees in cash but got into collecting credit card points on just about everything else. The CRA picked up on how much he was spending on his credit card and when it wasn't reasonable for his revenue they slammed the door on his fingers. All for reward points.
They've seen everything. An unusually large deduction for auto insurance triggered an audit. He had a small car collection plus 6 family vehicles being insured under his business-- $30K car insurance deduction didn't match his car expenses -- RED FLAG. They found the cars, asked for purchase history and determined he had bought $400K worth of cars & boats with cash. Then they found a cottage beside the boats along with a few jetskis and ATVs.
that’s true, if you read back, you will see the reply is related to more income more tax. For instance if you make $10 and pay $3 in tax, you are further ahead earning $12 and paying $4 in taxes.
Good tax management applies always, it just become more valuable as income increases.
Thanks for all the advice.
Now all we need is a good accountant to make sure we’re doing things correctly moving forward, because we’re definitely not looking for headaches down the road.
They've seen everything. An unusually large deduction for auto insurance triggered an audit. He had a small car collection plus 6 family vehicles being insured under his business-- $30K car insurance deduction didn't match his car expenses -- RED FLAG. They found the cars, asked for purchase history and determined he had bought $400K worth of cars & boats with cash. Then they found a cottage beside the boats along with a few jetskis and ATVs.
It was a painful experience,
that’s true, if you read back, you will see the reply is related to more income more tax. For instance if you make $10 and pay $3 in tax, you are further ahead earning $12 and paying $4 in taxes.
Good tax management applies always, it just become more valuable as income increases.
I know a guy who has his cottage address on his car ownership and drivers license. That would, in my mind, make his cottage his prime residence. Ouch when and if he sells his house. Ouch also if he has a collision serious enough to have an insurance investigation. Saves some insurance money now.
I know a guy who has his cottage address on his car ownership and drivers license. That would, in my mind, make his cottage his prime residence. Ouch when and if he sells his house. Ouch also if he has a collision serious enough to have an insurance investigation. Saves some insurance money now.
That is really bad. I keep a truck at my place in northern Ontario and it’s registered there for cheap insurance and plates. It stays there, I’d never register my other vehicles there as one accident claim and you’re into insurance fraud.
Thanks for all the advice.
Now all we need is a good accountant to make sure we’re doing things correctly moving forward, because we’re definitely not looking for headaches down the road.
That is really bad. I keep a truck at my place in northern Ontario and it’s registered there for cheap insurance and plates. It stays there, I’d never register my other vehicles there as one accident claim and you’re into insurance fraud.
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