[iherald]

I bought a house this year and it's a legal duplex. So I'm collecting rent and getting a salary at work. I've been using ufile online to do my taxes in the past, and I've noticed that they do allow for rental income.

But is there a better software program out there for this type of income stream?

Thanks!

 

[leslie]

What exactly do you mean by "they do not allow for rental income"? All tax prep software includes inputs for all income sources that the government taxes.

 

[iherald]

What exactly do you mean by "they do not allow for rental income"? All tax prep software includes inputs for all income sources that the government taxes.

I wrote that ufile does do rental income, but for example I bought a computer to keep track of expenses, do advertising etc. I can add that as an expense for the apartment, but it appears as though because the apartment is 40% of my house, and only 40% of the other expenses (interest, hydro, etc) are written off, I'm concerned it will only write off 40% of the cost of the computer.

So, the question really is what do people use to do their taxes that have a similar situation.

 

[MoneyGal]

This isn't a software question -- the software program isn't going to answer your questions. You need a bit of tax planning and advice.

You can read the CRA guide to rental income but you may want to spend an hour with an accountant or a tax preparer with experience in rental income situations to get the lay of the land.

 

[PhilHogan]

I wrote that ufile does do rental income, but for example I bought a computer to keep track of expenses, do advertising etc. I can add that as an expense for the apartment, but it appears as though because the apartment is 40% of my house, and only 40% of the other expenses (interest, hydro, etc) are written off, I'm concerned it will only write off 40% of the cost of the computer.

So, the question really is what do people use to do their taxes that have a similar situation.

If the computer is used 40% for keeping track of the rental property you should be able to depreciate the cost (40%) against your rental income e.g. Capital Cost Allowance for tax. I'm not sure, but I think Ufile has a section for Capital Cost Allowance for rental. You would have to add in 40% of the computer cost and it would calculate the appropriate deduction for the year.

As MoneyGal pointed out, reading the CRA guide to rental income would be a good start.

Good luck.

 

[MoneyGal]

Phil -- he isn't saying that the computer is used 40% of the time for keeping track of the rental property; he's saying by square footage the rental property is 40% of his total property -- so he's taking 40% of utilities etc. as deductions against rental income, and he's concerned that he can only depreciate 40% of the computer cost.

CRA will say that you can depreciate, using the appropriate CCA rates, a personal asset that you also use for business (i.e., a car, a computer) in accordance with the proportion of business use you derive from the asset compared to personal use. If you get some personal benefit from your computer, you cannot (or at least should not) write off the entire cost.

(Also, the OP seems to be mixing two issues together -- the rate of depreciation, which is established by CRA for depreciable assets; and the proportion of use of a personally-owned asset which is attributable to the business. If you own an asset personally, and intend to write off 100% of the costs of that personally-owned asset, you will still need to take CCA on the asset over time. You will not be able to take the full cost of the asset as a deduction in the current year.)

With a car, there are straightforward ways to calculate the proportion of personal benefit and business use -- using the "proportion of KMs driven for business and total number of KMs driven in the year" calculation. With an asset like a computer, the question is less straightforward.

I don't give advice over the Internet. Hence my recommendation for the OP to meet with a tax professional and get answers that way.

 

[PhilHogan]

Phil -- he isn't saying that the computer is used 40% of the time for keeping track of the rental property; he's saying by square footage the rental property is 40% of his total property -- so he's taking 40% of utilities etc. as deductions against rental income, and he's concerned that he can only depreciate 40% of the computer cost.

CRA will say that you can depreciate, using the appropriate CCA rates, a personal asset that you also use for business (i.e., a car, a computer) in accordance with the proportion of business use you derive from the asset compared to personal use. If you get some personal benefit from your computer, you cannot (or at least should not) write off the entire cost.

(Also, the OP seems to be mixing two issues together -- the rate of depreciation, which is established by CRA for depreciable assets; and the proportion of use of a personally-owned asset which is attributable to the business. If you own an asset personally, and intend to write off 100% of the costs of that personally-owned asset, you will still need to take CCA on the asset over time. You will not be able to take the full cost of the asset as a deduction in the current year.)

With a car, there are straightforward ways to calculate the proportion of personal benefit and business use -- using the "proportion of KMs driven for business and total number of KMs driven in the year" calculation. With an asset like a computer, the question is less straightforward.

I don't give advice over the Internet. Hence my recommendation for the OP to meet with a tax professional and get answers that way.

Hi MoneyGal

Thanks for the clarification. I neglected to properly read the original post with respect to the 40% allocation. And yes you're right the computer would be eligible for capital cost allowance to the extent that it was used for rental purposes only, i.e. net of personal use.

Regards

Phil

 

[iherald]

My real problem was although I do know all the tax stuff I had a brain fart and forgot that computers are CCA, even though with the new budget I can write off the whole thing this year (at least the percentage used for business).