Tax Tips for Real Estate Investors
As we all know, taxes are part of every financial transaction. Even if you have mastered the art
of tax planning, many real estate investors may not understand how quickly seemingly viable
investments can turn into financial disasters.
You mitigate the amount of tax you are charged and start building wealth by tax planning. For
real estate investors in Ontario, understanding the different tax implications, tax strategies, and
tax deductibles will help you keep money in your own pocket.
3 Tax Planning Tips For Real Estate Business Owners
Real estate investors start investing by purchasing anything from parking lots to commercial
buildings. If you have experience doing so, you likely have a good understanding of the different
tax implications that come with purchasing real estate. However, when tax season rolls around,
you may find yourself feeling overwhelmed.
Here are some real estate financial and tax tips that can come in handy for Ontario real estate
investors before the season hits.
1. Familiarize Yourself With the Tax Filing Process
One of the first and most important tax tips for a Canadian real estate investor is to become
familiar with the tax filing process, especially how it relates to property ownership.
While the May 1st tax deadline may feel months away, it’s important that you understand what is
needed ahead of the deadline.
Keep your documents and forms organized
As a general rule of thumb, you should keep your forms organized as this will save you a lot of
time and stress when tax season hits and you have to submit your tax return.
In Canada, you have the obligation of reporting any sales or rental income made as a direct
result of real estate investing. This involves the sale of one of your real estate investments or
the income you make as a landlord.
As well, if you own rental properties and employ property managers, you will need to complete a
T4 form for your employees.
Use a Chartered Accountant
With so many different forms that serve different purposes, one of the best real estate tax tips
out there is seeking professional help from a tax planning accountant. Certified public accountants (CPA) can provide expert money saving advice and can also be hired to file your tax returns for you.
As a real estate investor, you should seek out an accountant who specializes in real estate investing. These professionals can provide practical advice on tax rules and financial planning specific to real estate investing.
2. Understand Write-Offs and Tax Deduction
Another one of the important Canadian specific tips for real estate investors is understanding
the write-off opportunities and deductibles available to you.
Generally speaking, self-employed business owners or investors should track all of their
business expenses and keep their receipts. Certain expenses can be deducted from taxable
income and can save you money.
Be sure to track all of your business expenses and keep those receipts or credit card statements handy so that they can be used for tax purposes.
Not only will these receipts help you save money, but it will help you stay organized and keep proper records of all your business transactions.
Tax deductions, which is an item that you can subtract from your total taxable income, can also be used to lower your tax bill for a specific tax year. There are many different types of tax deductions out there, so successfully navigating which ones match your personal situation will be important. in order to minimize your tax paid.
Some potential tax deductions for your upcoming filing include things like:
● Marketing materials
● Business training, coaching, or educational costs
● Licensing and renewal fees
● Home office expenses
3. Reinvest Your Income into the Market
As many investing and business professionals know, you need to spend money to make money.
When it comes to real estate tax tips, the same rule can be applied.
When you make money from a sale of an investment you can reinvest that income by putting it
towards another investment. This can help lower your tax rate and save you money when tax
What’s important here is to plan ahead. You don’t want to just throw your money into the market
without some strategy as this can easily end up costing you more money.
This is where you can consider working with the real estate agents at Your Niagara Home to help you find property to invest in that makes sense for your financial situation.
When it comes to investing in the real estate market, there are so many things to consider and
keep track of, especially regarding taxes. Don’t wait until the last week before the deadline to
start preparing your return. Preparing things ahead of time will go a long way and save you time
and money in the long run.
Taxes don’t have to reduce your take home income significantly if you are adequately prepared.
The team of experienced real estate agents at Your Niagara Home can help you find the next
investment property for you! Contact us today to see how we can help you.
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