As tax season approaches, property owners in Kelowna and beyond are shifting their focus to one of the more complex areas of filing, Rental Income.
Whether you’re renting out a basement suite, a vacation property, or a multi-unit commercial building, accuracy is the key to a stress-free experience. If you plan on visiting the team at Switzer & Co., arriving prepared ensures you don’t miss out on valuable deductions that could lower your tax liability.
Here is your essential checklist for gathering rental income information and documents:
1. The Property Fundamentals
Before diving into the numbers, we need the “who, what, and where” of your rental operations:
- Property Address: The physical location of the rental unit(s).
- Number of Units: How many distinct spaces are being rented?
- Percentage of Ownership: If you co-own the property (with a spouse or partner), we need the exact split.
- Percentage of Personal Use: If you live in part of the house or use the rental for personal use during the year, we must calculate the prorated business portion.
2. Total Rental Income
- Gross Rents: The total amount of rent collected from tenants during the calendar year.
- Other Income: Include any additional fees collected, such as parking, coin-operated laundry, or lease cancellation payments.
3. Operating Expenses (Your Deductions)
To minimize your tax bill, you need to track what you spent to keep the property running. Have records for the following:
- Advertising: Costs for listing the property online or in local media.
- Insurance: Premiums paid for the rental property during the year.
- Interest & Bank Charges: Mortgage interest (not the principal) and any fees associated with your rental bank account.
- Management & Admin Fees: Fees paid to property managers or agents.
- Professional Fees: Legal fees for drafting leases and accounting fees for tax preparation.
- Office Expenses: Small items like stationery, stamps, and basic office supplies used for the business.
- Repairs & Maintenance: Costs for keeping the property in good habitability (plumbing, painting, etc.). Note: Major renovations may be considered capital expenses.
- Salaries, Wages & Benefits: If you employ a caretaker or cleaner.
- Property Taxes: Municipal taxes paid for the year.
- Utilities: Heat, hydro, water, and gas (if paid by the landlord).
- Travel: Expenses incurred to collect rents or supervise repairs.
4. Vehicle Expenses
If you use your personal vehicle for rental-related tasks:
- Motor Vehicle Expenses: Fuel, maintenance, and insurance records.
- Mileage Log: A record of total kilometres driven for the year vs. kilometres driven specifically for the rental business.
Preparation Leads to Success
Filing rental income can be time-consuming, but with the help of a professional and a complete paper trail, it doesn’t have to be a headache. Before your appointment, take a moment to organize your receipts and slips into the categories above.
Pro-Tip: If this is your first year renting or if you sold a rental property this year, please bring any purchase or sale agreements and your Statement of Adjustments.
How Switzer & Co. Can Help
At Switzer & Co., we specialize in helping Kelowna residents navigate the complexities of personal, small business, and corporate tax. We offer two easy ways to get your information to us: in person at our Kelowna location or through our secure online portal.
Ready to optimize your rental property’s performance? Contact our Kelowna team of experienced consultants today. Beyond tax filing, we offer management consulting and accounting services to help you achieve your long-term financial goals.
