Hello Anon, In Canada there is no way to write off the full costs of your main residence. If you are self employed you can claim a portion of your home as an office you will be able to write off a portion of your home expenses on your taxes. Speak to an Accountant to make sure how much you can claim and if you are eligible. If you have a property that is considered a rental property you can write off 100% of the cost of owning that property against the income you get for rental of that property. We are all hoping that Canada will fall in line with the US regarding the ability to write off your mortgage, property tax etc for your main residence but it is not a law yet. If you or any reader have a question regarding this or any topic please do not hesitate to contact me at any time. Abraham Niyazi - Mortgage Agent - Lic#M08010640 - Centum One FInancial Corp - Lic 10758. Cell: 416-993-4082 Toll Free: 1-866-728-3708 http://www.centum.ca/abraham_niyazi/ I deal with 25 Banks/Lenders and can do mortgages across Canada except Quebec.

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If the rooms take up 15% of my house, can i then deduct 15% of the interest on my mortgage as part of the expenses on my rental property income tax form? i do currently report the income from the rentals and i deduct some expenses like part of utilities and property tax but have not deduct mortgage interest up to now.

Short answer...yes. An expense that is made to earn income (in whatever proportion) is an allowable deduction. Just take care when determining what to expense. Should you decide to start expensing the appropriate proportion of the value of your house (through a CCA deduction), then when you go to sell, you'll have a recapture that might possible result in a taxable income (a gain on that portion written down). This overrides the exemption that we have with regard to the principal residence.

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I own a commercial office suite, which i rent. are expenses such as mortgage interest, taxes, insurance, repairs, deductable in my personal return, as they would be in the case of a residential rental property? i can't find reference to decuting expenses for a commercial rental property in personal income, anywhere in the irs website.

Yes, as well as declaring the income.

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We bought a house in june of last year. as a result of buying this house, we had to purchase a refrigerator, washer and dryer as well as a few other minor things like light bulbs. we also had to have repairs done to the plumbing to make it liveable. are any of these expenses deductible on our federal tax return? i know we can deduct mortgage interest and property taxes, i'm just wondering about the other stuff since they were necessary expenses.

Sorry but no, these are costs associated with owning a home and cannot be deducted on your tax return (even though they were necessary to make the home livable). The only thing deductible in a primary home, like you mentioned, are the mortgage interest and property taxes. It would be a different story if the property was a rental property.

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I know that mortgage interest paid to a bank or financial institute can be deducted as the expense from rental income. then, how about the interest against a private loan? i borrowed money from my friend to buy a rental property and pay him interest every month. can i also deduct the loan interest from my rental income as expenses in filing tax return? if yes, any form i should get from him?

Since you are paying him interest on your rental property loan that will be a deduction you will take on your Schedule E. He should issue you a Form 1098 that can even be on a regular sheet of paper showing how much he received from you in interest. He should include a tax identification number of some sort and if he is not organized as a business then his social security number will do.

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Hi, i'm a married canadian citizen with one child keeping my cad residency while working in us on h-1b. i own a property in cad while rent in us. my wife is on h4 and has a ss# while my daughter is dual citizen (us and canadian). 1. can i deduct mortgage interest from my canadian property in us tax return? 2. i commute back and forth and work for home in cad for the same us company. 3. can i deduct traveling expense back and fourth? thanks! hi, my h-1b is good until 2010 and throughout 2007 i was present in the nj for a little over 200 days. after reading the irs publication 463, i'm thinking my tax home would be nj. so, i most probably couldn't deduct traveling, how about mortgage interest?

You haven't told us how long you have been in the US during 2007 or how long your contract is. If you haven't met the substantial presence test, you would file a form 1040NR and there is no mortgage interest deduction on that form. Read IRS publication 463 to understand the concept of tax home. If your tax home is in Canada, the travel expenses are deductable. If your tax home is in the US, then travel expenses are NOT deductable. You can have a tax home in the US even if your family is in Canada. As a resident of Canada, you may be able to claim your wife and child on the 1040NR return and reduce your income by $3400 for each of you.

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I know that mortgage interest paid to a bank or financial institute can be deducted as the expense from rental income. then, how about the interest against a private loan? i borrowed money from my friend to buy a rental property and pay him interest every month. can i also deduct the loan interest from my rental income as expenses in filing tax return? if yes, any form i should get from him?

Your lender (friend) needs to issue you a 1099 INT at the end of the year which shows the Interest you paid. He sends in a 1099 transmittal form to the IRS the interest is Income to your friend. Make sure he issues the 1099. Then by all means deduct it on your schdule E. Also, if this is your first year, use form 4562 to report the depreciation you will be taking for each year you own the property . You only list the property on this form the first year you own it. After that you only put the address and other Info on schedule E. Hope this helps

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I refinanced last yr on my rental property to a 30-yr conforming mortgage of $408,000 at 5.25%. i think i timed it well, but now i have a lot of spare cash after getting my bonus. cash is paying 3% right now. for every $1 i use to pay off my mortgage, is that equal to a 5.25% return as some say? or is it equal to 5.25% minus 3% = 2.25% return since i forgo interest income, or is it really 5.25% minus (3% x 50% = 1.5%) = 3.75% return b/c i have to pay tax on my 3% cash income, and i can't deduct 5.25% interest expense from my income b/c this is a rental property. thanks for helping me think about my finances! the resort at squaw creek, lake tahoe, californnia www.squawcreek.com

Reiterating the first answerer: WOW Essentially your best option is to always pay off the highest interest percentage first. If you are earning 3% on cash and paying 5.25% on mortgage, it is obviously not a good decision. You are losing 2.25%. If you are paying 50% tax on your interest, you need to change your tax attorney. lol