rental incomes and working full time..

[daytona]

Im in a current position where I got three rental properties with a total income of say $55,000 a year before expenses (property tax,insurance,etc)...with my current working income and my rental income I be pushing $100k on Notice of Assessment ..whats is the best way to reduce the pain of being in a higher tax bracket...work less hours,investments,etc,etc...any tips?...I;m going to a investment adviser later on just to see what I can do to not get killed on income taxes...

[cormier]

RRSPs, RESPs if you have kids, Swiss band account lol... The TFSA won't help now but may down the road

[daytona]

no kids but a girlfriend who spends money like there is no tomorrow...some one even told me to work less hours and go part time which is very very tempting...

[damameke]

work less hour is one option but that would not save you much,, investment except RRSP contribution will not minimise your tax.. Incorporating separate your rental income from your personnal income..

[TSI]

Keep in mind the bracket doesn't affect your whole income, only that amount which you make within that bracket.

Ex. if you make 150k, and the second bracket starts at 100k, you only pay the higher tax on 50k of your income. Therefore, the extra tax might not be worth the hassle.

Other thing is, if your gf lives as common-law with you, you can transfer income to her. CRA loves couples. At least, it was the case 3 years ago when I read tax law.

[marek]

Is your income $55k or your revenue $55k? Don't all your properties require maintenance? I believe with 3 properties you can start writing of mileage to get to said properties, in order to manage them.
Also that only bumps $13k into the higher tax bracket, so only that amount will be taxed at the higher federal rate. You are still in the same rate for your provincial income tax. In other words not worth working less.

[slemmer]

Create yourself a property mgmt company and start writing off expenses expected with rental properties. Also deduct your girlfriend as advertising expense (lol).

[daytona]

All properties are condos and there is a fix maintenance expenses..rental income about $55k salary about $47k.....when bracket does the government really stick it to you...is it above $100k?...

[sirex]

Ok, so your properties pull in $55 K a year, but I bet it costs you $25K in interest for all 3 mortgages.

So that brings it down.

[daytona]

Originally Posted by sirex

Ok, so your properties pull in $55 K a year, but I bet it costs you $25K in interest for all 3 mortgages.

So that brings it down.

actually not really since one is almost paid off and the other two I put large downpayments and got some really good rates at that time.I thought I can convince myself I dont have to work 50 work weeks and do less hours so I can save on taxes.

[uber e36]

The $55k is gross rental revenue, right? You'll be applying property tax and condo fees against that revenue. So your taxable income will be less...

[cormier]

Haha work until they're all paid of and you'll thank yourself :p

[sirex]

Originally Posted by daytona

actually not really since one is almost paid off and the other two I put large downpayments and got some really good rates at that time.I thought I can convince myself I dont have to work 50 work weeks and do less hours so I can save on taxes.

well I never understood why people were so worried about the taxes.

You still make more at the end of the day. Now if you think that extra hour of work costs your body and life substantially more than the pay off you are getting after tax, then you shouldn't work.

However if you can handle it, at the end of the day, the bottom line is you're making more money.

Now strive to make more, e.g. $200K a year.

ORRRRRR

Re-mortgage your properties and buy some more properties.

I would stay away from Condo market. Just spoke to a CMHC rep and they said condo market is collapsing they are declining refinances left, right and centre.

[davericher20]

Hire a property management company, they typically run $75-$100 per unit. Still work full-time and get raped by the tax man. Hope that helps.

[dtthiaga]

Originally Posted by daytona

total income of say $55,000 a year before expenses (property tax,insurance,etc)...with my current working income and my rental income I be pushing $100k on Notice of Assessmen

.. I'd keep working full time. Have you considered what would happen if 1 or 2 units did not have a tenant. Or worse, one doesn't pay their rent for 5 months. I always factor in, that I should be able to carry one rental property for at least 6 months if I don't get rent...

You're not making $100K when you factor in expenses.

..............quick income sheet

3 Units @ 1500/month Approx = $54,000 /Year

Expenses (low estimates - just to see).
==============================
Condo Fees $300/month x3 = $10,800/year
Property Tax $1500/year x3 = $4,500/year
Insurance 2Mil Lib. $50/month x3 = $1,800/year
Mortgage $500/month x3 = $18,000/year

Total Expenses = $35,100.00

Profit = $18,900

So.. your net income is $65,900 (18K+47K)

... don't forget, you can subtract mortgage interest against rental property "income"...
So many other deductions you can take..

Talk to an accountant if you don't know the specific details.