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How to ensure you take advantage of all the tax benefits that come with being a landlord

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Some people boast of the tax benefits associated with being a landlord, but not all rental losses are tax deductible.Jim Wells//Postmedia

It seems like nearly everyone you talk to these days is a landlord or is thinking of becoming one. While some of us may simply rent out our basement to bring in extra income to help cover the mortgage, others are forgoing more traditional retirement savings vehicles such as RRSPs and TFSAs for the allure of investing in residential real estate. After all, why not collect some rental income to help offset some of the expenses with a view to disposing of the real estate in a future year, hopefully at a significant profit?

Some people even boast of the tax benefits associated with being a landlord, as they seek to use any rental losses generated from their rental properties to reduce taxes owing on other income, such as employment or business income.

But you need to be careful if your properties don’t generate enough income to cover the associated expenses as the rental losses that you are generating may not be tax deductible. The Canada Revenue Agency (CRA) has said that if, for example, you rent out a part of your home and your expenses exceed your income, you cannot claim your expenses if you have no reasonable expectation of making a profit. So, if your expenses exceed your income on a consistent basis, you may not be able to claim any losses.

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