Questions about second house

[Monkey In Forest]

Could anybody provide some information as follows?

1. What more taxes need to be paid when buying the second house compared to the first one? How much roughly?

2. If the second house is for renting, what tax needs to be paid? How much roughly?

3. When the second house is being sold, what tax need to be paid? How much roughly?

Thanks a lot in advance.

 

[Timothy's]

1) no more tax, the propety tax is the same.
2)second house is considered a investment. If you rent it out, after deduct all your expenses(repair and mortage payment), the net profit is added to your income. Depending on your income, the tax rate would be different. If you have a net loss, it could be used to against captial gain tax when you sell it.
3) the profit would be subjected to captial gain tax. 50% of the profit added to you current income. again according to your income the tax is different.

 

[风 雨]

I thought there's a difference in terms of tax. Is this still true?

 

[cable4sale]

2)second house is considered a investment. If you rent it out, after deduct all your expenses(repair and mortage payment), the net profit is added to your income. Depending on your income, the tax rate would be different. If you have a net loss, it could be used to against captial gain tax when you sell it.

if i have a net loss $2,000 per year for 5 years,when sell it and the capital gain is $ 20,000 how do i use for against capital gain?

 

[Timothy's]

Property rental - What expenses can be deducted from income?
If you rent out one or more rooms in your home, or if you own a rental property, there are many expenses that can be deducted in calculating your net rental income. These expenses include mortgage interest (but not principal), property taxes, utility costs, house insurance, maintenance costs, advertising, and property management fees. Rental income and expenses are recorded using the accrual basis of accounting. Rental losses can generally be used to reduce income from other sources. If the rental loss exceeds income from other sources, and cannot be deducted on the current year tax return, it becomes a non-capital loss, which can be carried back or forward to reduce taxable income in other years.
If you rent out only a portion of your home, you would only be able to deduct a portion of the costs. If you rent a room to a friend or relative at less than fair market value and this results in a rental loss, you would not be able to deduct the rental loss.
Capital cost allowance (CCA) may be claimed based on the purchase price of the building, furniture and fixtures, etc., but not the land, and may not be used to create or increase a rental loss. If you only rent a portion of your home, then you would only be able to claim a portion of the CCA, and this may result in the loss of the principal residence exemption when you eventually sell your home. The claiming of capital cost allowance will probably result in a recapture of the CCA when the property is sold. This will happen if the selling price of the building is greater than the remaining undepreciated capital cost (UCC) at the time of sale. The difference between the original cost and the UCC will be added back to income. If the selling price is greater than the original cost of the building, then the difference between the selling price and the original cost will be a capital gain. When purchasing or selling a rental property, it is important to break down the purchase or sale price between buildings and land.
A change in use of your home from personal residence to rental property, or from rental property to personal residence, can result in a deemed disposition for tax purposes. This means that you will be considered to have sold your home and repurchased it immediately thereafter for fair market value. There are many factors which affect this, and professional advice is recommended.
Net rental income or loss is reported on line 126 of your personal tax return. This net income is included in "earned income" for purposes of calculating your allowable RRSP deduction limit for the following year.
Canada Revenue Agency (CRA) has a Rental Income Guide (T4036) which goes into detail about deductible expenses, capital cost allowance, deemed dispositions, and most issues regarding property rental.
See also our Real Estate page.

taxtips.ca - Property rental - deductible expenses

 

[Timothy's]

No I don't think so. These should be included in house value.