A colleague I’ll call Andy came up against a curious barrier to deducting mortgage interest on a rental property. Canada Revenue Agency (CRA) likes to see a straight line between the mortgage lump sum and the purchase of the property that will generate rental income. Unfortunately, it seems that Andy cannot easily draw a line that would satisfy CRA. Andy owns a small home free and clear. He plans to move to a new larger home soon. He had hoped to rent out his old home to make some rental income. His plan had been to take out a mortgage on the old home and use this money to reduce the size of the mortgage on his new home. A side benefit Andy hoped for was using the interest on the mortgage on the old house once it becomes a rental property as a deduction against the rental income. Unfortunately, CRA won’t allow this. From CRA’s point of view, the borrowed money wouldn’t be used to purchase an investment, but would be used to buy Andy’s new home. The following Q and A on page...
Thanks for the mention, some good comments about Pet Insurance too!
ReplyDeleteThanks for the mention. It seems that retailers are miscalculating the ecofees on various products too, in some cases it can add 50% or more to the original cost of the item. Lots of people calling into the local radio station I listen too with anecdotal evidence. We may see a Canadian Tea Party...
ReplyDeleteThanks for the link Michael. Insurance rates are getting ridiculous in Ontario, let's hope the Auto Reform will bring them back to normal in the long term.
ReplyDeleteThanks for the mention Michael!
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