Tax Tips You Need to Think About as a Real Estate Investor
Chances are you are like the many other Canadian tax payers who want to be sure that you are going to be financially comfortable for your retirement years. It is not enough anymore to just rely on your Canada Pension Plan, or Old Age Security pension to make your later years in life comfortable. The cost of living goes way beyond pension income. This leads those thinking about their future to considering some property investments, but before becoming a real estate investor there are a lot of things you need to consider.
Before even thinking about the potential tax benefits or implications that this sort of investment can bring you, first you need to know that the property you are going to be putting your money into is a sound investment. This means you really need to do some research into the condition that the property is in, in relation to what you will be paying for it. Home inspections are well worth the time and effort as there are many hidden aspects of a building that cannot be seen with just a quick physical look during your review of properties for sale.
You also have to consider the different types of property investments that are available to you. For example, you may have your eye on prime property that doesn’t contain any buildings. Or, you may be looking at residential or commercial property that is going to glean you an immediate income through rent collection, and is also a long term investment with the property going up in value over the years.
From a tax point of view you need to consider the present as well as the future. If you are investing in income property then this is going to have an effect on your tax situation now. If you have other income the additional income from the rental property could push you into a higher tax bracket. At the same time you will be able to deduct the allowable expenses that you incur in order to be able to generate that rental income.
In respect to future tax implications, as you know the tax laws change all the time. So while there may be some good tax incentives now to entice you to invest in real estate they may not be available in years to come. This is not something you can predict.
Real estate investment is something that you may want to discuss with your Toronto accountant to see what type of immediate impact it could have on your tax situation now and how it could potentially benefit you in your retirement years.