30 Jul 2013

Landlords face a special kind of turmoil when they’re trying to run their rental business.

Unpaid rent.

Last week, A1 Accounting introduced you to the basics of claiming taxes on rental income and the expenses you can deduct to lower any tax bill you might get from the Canada Revenue Agency.

Now, we’ll look at income loss, specific to landlords.

Sometimes a tenant might take off on a midnight move and leave you high and dry, with only the security deposit to pay for unpaid bills and the apartment’s vacancy.

The CRA allows you to have losses from uncollectible debts or a portion of an uncollectible debt.

These can be deducted from your gross rental income.

The debt must fall under the following criteria to be eligible:

    • It must be owing to you at the end of the tax year
    • It must have become uncollectible during the tax year


  • It must have been included or deemed to have been included in your income for the year or a previous tax year

With every expense or loss, you have proof of your uncollectible debt. For unpaid rent, you must be able to show you pursued the tenant without success of receiving a payment.

I rent to family below cost

Aw, you big softie …

You might want to be a nice guy and rent your second house or condo to a relative for a lower rate than you would rent it to any other tenant.

Trouble is, you can’t claim any rental loss from a deficit incurred by renting below fair market value.

According to the CRA, your rental operation is not considered to be a source of income if your expenses are consistently more than your income.

The CRA has a handy online guide specific to rental income. The guide helps you determine your gross rental income, the expenses you can deduct and your rental income or loss for the year.

Can you help?

We’re here to assist you with your taxes and planning. We specialize in small-business accounting and financial services. Contact one of our tax specialists and we can help you optimize the tax benefits and credits available to landlords, self-employed individuals and small businesses.

Fill out our contact form or give us a call at 403-226-8297.

Follow along

The Canada Revenue Agency has an active Twitter account. If you’re interested in following the account, you can the CRA at@CanRevAgency.

And don’t forget us! We’re on there, too, talking about taxes and business, especially for small businesses and entrepreneurs. Find us at @A1Acct. While you’re at it, like us on Facebook