Whether you live in West Vancouver or are planning to visit, it is a good idea to know how rental income is taxed in West Vancouver. In this article, we will discuss how the taxes are calculated and how it affects you as a property owner.
Capital gains on principal residences are exempt from taxation
Whether you own your home outright or rent it, you may be wondering if the gains from the sale of your primary residence are tax exempt. The Canadian federal government has a principal residence exemption which can protect up to 100% of your gain. But there are certain requirements for you to meet to qualify.
First, you must own your home for five years. This is an unwritten rule, but it can help you avoid paying taxes on the sale proceeds.
Secondly, you must live in the home for at least six months. The Canadian government has examples for you to follow. For example, if you live near a child’s treatment facility, you can claim an exemption for the year you bought the home. If you’re unable to make a declaration, you can ask an authorized person to do it on your behalf.
Finally, if you own a second home, you must declare the gains and losses from the sale. These are usually considered business income, but in some cases they can also be used to reduce your capital gain.
If you own a lot, you can claim a vacancy tax exemption for the year you sell the lot. This is a tax relief for convenience.
You can also claim an exemption if you were away from your home for an extended period of time. If you’re a member of the Canadian Armed Forces, you may be able to claim an exemption for military service.
In BC, you can also claim an exemption for your year of purchase. For instance, if you bought a cottage in 2001 for $300,000, you can claim an exemption for the year of purchase.
Property taxes are deductible whether you use the property as a second home or you rent it out
Whether you live in West Vancouver and rent out your home for a few months out of the year or you own a second home in West Vancouver, you may be surprised to learn that you can actually write off some of the property taxes you pay each year. The CRA has a number of exemptions you can apply for. Depending on the type of investment property you own, you may be able to claim mortgage interest as a deduction.
The CRA also has a number of other tax exemptions you can claim. For example, you can deduct the cost of maintaining your rental property. You can also deduct expenses related to repairing or renovating your home. You can also deduct the costs of travel. You can even deduct salary or wages paid to employees, a real estate agent, and a property manager.
The CRA has a very comprehensive list of tax exemptions. You can find them online. You may want to consider getting advice from a tax professional to determine which ones you qualify for.
The CRA’s standard deduction for a single taxpayer in Canada is $12,000, while the maximum deduction is limited to $5,000 if you are married and filing separately. However, you can claim a larger deduction if you own a second home and rent out part of it.
The CRA is especially interested in investors who buy and sell properties quickly. It pays close attention to these investors. This includes allowing people to write off property taxes on vacation homes. The amount of the deduction is calculated by dividing the square footage of the home by twelve months. The corresponding rule is not as simple as it sounds.
Property taxes are paid by the 15th of the following month following the month in which the rent was received
Depending on where you live, your property taxes can be paid in two ways. First, you can pay the city directly or through your mortgage lender. The second option is to use a PAWS plan to pre-pay your taxes over a 10-month period.
Your property tax rate will depend on your assessed value. You should consult your municipality for a detailed explanation. Your taxing authority will set the rates for each class of property. The amount of tax you will have to pay will be calculated by multiplying your taxable assessed value by the rate. If your property is classified as residential, you can expect to pay about 3% of your taxable assessed value in property tax.
You can make your property tax payment at the cashier’s window at City Hall or you can send your payment by mail. You may also use a credit card to make your payments. Most Canadian chartered banks offer a service that allows you to pay your property taxes online.
Some financial institutions will process your payments within a few days. If you are a member of a financial institution, you can also receive credit card rewards for paying your property taxes.
If you are not a member of a financial institution, your local taxing authority may have an online look-up tool to determine your tax rates. If you have a problem with your bill, you can also contact the DOR. DOR representatives cannot discuss confidential information in your tax account with you.
If you are a homeowner, you can claim the Home Owner Grant to reduce your property taxes. You must claim your grant by the due date, however.
Expansion of the rental income tax
Whether you’re a Canadian resident, a visitor to Vancouver or both, you’re going to have to pay the price of admission to partake in the Vancouver rental market. So, what’s the best way to go about it? There are many ways to do it. The most obvious option is to hire the services of a qualified tax expert. Fortunately, there are a slew of companies in this business to choose from. Among them, we’ve found a company that is a bit of a chameleon. As a result, you’ll be able to spend more time concentrating on other important things like your new job and more importantly, enhancing your personal growth and well being. And, the company is also very friendly and tolerant. It’s a good thing, since a new employee is often a harried worker who is always looking for a new mate. Moreover, the company is also a member of the Vancouver Chamber of Commerce which can help in establishing a solid rapport with your future employer.
Impact on housing costs
Despite the government’s efforts to curb the housing market, prices have continued to climb. Property values have increased almost two times in the past decade. A recent survey by an international organization ranked Vancouver as the third most unaffordable market in eight nations by 2022.
Academics say misguided government policies have pushed prices higher. New taxes on homeowners have contributed to the affordability problem. But a new campaign group called Housing Action for Local Taxpayers says government has a responsibility to put more power in the hands of the market.
A key component of the British Columbia tax system is a capital gains exemption for principal residences. This encourages speculative investment in residential property. The government has tried to cool speculation with five new targeted taxes. But none have proved successful.
Last year, foreign buyers accounted for a tiny fraction of properties bought in B.C., at about one percent. But that isn’t the end of the story. These “destination subdivisions” can also be affected by foreign demand shocks.
According to a recent report, there were over 10,000 vacant apartments in Vancouver owned by foreign investors. The city is working to discourage speculators with a vacancy tax and a Speculation and Vacancy Tax (SVT). But these policies have not helped slow the housing frenzy. In fact, the tax and the SVT contributed to higher prices and a shortage of affordable housing in the city.
Debelle fears that a stalemate in the market is inevitable. He also fears for Canada’s global reputation. He argues that the new tax will destroy the local economy.
He said a 15% tax on overseas buyers will only make it harder for entry-level apartment buyers to enter the market. But, he added, a 15% tax will not solve the affordability crisis in Vancouver.
Among many other things, David A. Grantham is a contributing author to UmassExtension West Vancouver Blo. He is a renowned expert on real estate in BC.
Born in North Vancouver, Louisiana, Dr. Grantham grew up in Lower Lonsdale. He then went on to complete his business degree at the University British Columbia. As of this writing, Grantham has completed over 100 projects, including the development of a high rise building in Vancouver.
He is a husband, father, son, brother, and friend. He was a dedicated outdoorsman and enjoyed sports such as hunting, fishing, scuba diving, and snow skiing. His wife, Alison Grantham, and their two daughters survived him. He is survived by his wife Alison Martin Grantham and two daughters.