Just Accounting - Integrity Kept Simple

Call Us now

(778) 792 3282




We are pleased to provide a variety of resources on accounting, taxation, and other related subjects that we think you will find helpful to both individuals and businesses. Browse through the Quick Tools resource menu then, if you have a question that isn’t answered, we can help to clarify your situation. Simply contact us by email or give us a call at 778-792-3282. We would be happy to meet with you for a free, no-obligation consultation to discuss your unique situation.

Renting Out Part of your Home: The New Rules

Hello everyone, in today’s market of record high real estate prices many home owners are electing to rent out a portion of their homes. Whether this is to lessen the financial burden of their mortgages, place an alternative revenue stream in savings, supplement their income, or all of the above, the practice is extremely common. 

Unfortunately, the recent changes to principle resident rules have effected the rules regarding renting a portion of a home. Currently, if you change part of your home into a rental or business operation you are deemed to have sold (as far as taxation is concerned) it at a fair market value and to have reacquired it at the same amount. Furthermore, any income or loss generated by the change must be reported in the year the change occurs.

This means for homeowners who rent out part of their home that any income realized through renting part of the property in years after the change of use must be reported and will be taxable upon the sale of property. Interestingly enough, it is possible to seek exemption for the change of use rules if no structural change to the property is made to make it more suitable for rental or business or if the rental or business area is very small. These exemptions fall entirely to the discretion of the CRA and what they consider to be “reasonable.”

With these changes and more likely to follow, it is more important than ever to have an experienced tax representative at your disposal.

  1099 Hits

The Principle Residence, the Home Office, and the Taxpayer

Hello everyone, as has been discussed previously there are new rules in place governing what constitutes a principle residence and the reporting of such for tax purposes. In addition to tightening the definition of what constitutes a principal residence, stating that to claim such someone must reside there at least 50% of the time. The CRA has also changed their language regarding home offices. The CRA 2016 tax planning guide rigidly defines the home office as a section of a principle residence “used on a regular and continuous basis for meeting customers, clients, or patients.”

If you are self-employed and utilize a home office, you can deduct a portion of the operating cost of your home. For example, if your home office takes up 15% of the total square footage of your home you can claim as a deduction from your business income 15% of property taxes, hydro, heat, home insurance, maintenance costs, and even 15% of your mortgage interest (but not principle). These expenses cannot exceed $5000 in a fiscal year but can be carried forward and claimed against income in the next year.

  1154 Hits