Rents going down ...

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foenix
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Re: Rents going down ...

Post by foenix »

Rejigger wrote: Aug 26th, 2021, 9:01 am

Rent controls in this province haven't changed in some time, yes? Yet apparently, rents have gone down. So what, then, is the contributing factor in this decrease?
That's what we are asking you because, you seem to think the rents goes up all the time due to "rent control".
foenix
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Re: Rents going down ...

Post by foenix »

Rejigger wrote: Aug 26th, 2021, 9:12 am
foenix wrote: Aug 25th, 2021, 7:18 pm Ummmm no......When I was doing my own accounting and adjusting for when rents went down or when rents went up, I always got to deduct any expenses related to the generation of the gross rental income when rents went down or up. That was called net rental income and that line was added to your total gross income line. One would know that... [snip]
If you're familiar with taxes, then you would be talking about depreciation/amortization and how it typically reduces net rental income to zero.

And if someone argues that a landlord "doesn't have to take depreciation", then that same someone cannot complain that landlords don't spend money on upgrading their rentals. Those two arguments contradict each other, so no need to go there.
~
I guess you aren't that familiar with rental taxes either. As far as I remember, depreciation/amortiztions aren't used in the calculation of the year to year gross rental income. instead they are used when "improvements" are made for the capital assets. I also believe if you used those "depreciation" over the course of the asset, when one goes to sell that asset, those "depreciations" are taxable upon sale. Here's some reading material to catch up.....

Capital vs. Current Expenses
Current expenses fall in the first category. The latter is referred to as capital expenses. Generally speaking, a current expense reoccurs after a short period. An example provided by the CRA is the cost you incur to paint the exterior of your wooden property.

Capital expenses, on the other hand, offer a lasting advantage or benefit. The CRA defines them as “renovations and expenses that extend the useful life of your property or improve it beyond its original condition.” Placing vinyl siding on the exterior walls of your wooden property, for instance, is a capital expense.

What Can I Write Off on My Rental Property in Canada?
Today’s guide has covered many of the expenses you can write-off on your taxes in Canada in detail; scroll back up to get a closer look at the details of those expenses and deductions.

Deductible rental expenses may include:

Advertising
Insurance
Office expenses
Professional fees
Administrative fees
Cost of repairs
Maintenance fees
Salaries and wages
Cost of benefits
Property taxes
Cost of travel for work
Utilities
Prepaid expenses
Landscaping costs
Condominium fees
https://buttonwood.ca/rental-property-t ... ns-canada/

I don't see "depreciation" as one of those yearly deductions to generate an income, you?
BC Landlord
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Re: Rents going down ...

Post by BC Landlord »

foenix wrote: Aug 26th, 2021, 9:08 am
The example is not only hypothetical, it's a ridiculous made up example in trying to fit a narrative.
...
Why not use some believable numbers but then again, if one did that, the narrative falls apart, hey?
The example I used above was to illustrate (and simplify for you) that the less taxes you pay, the less you can save by claiming expenses. In this case (basic, aka personal amount) that would be $0.00, ... zero, nada in savings. But if you want some real numbers, ... here it is:

The vast majority of small landlords (mom & pop style) would sit in $13k-43k taxable income brackets. So, by claiming their rental expenses, they would only save about 20% (federal and BC income tax rates combined). So for example, by claiming property tax as an expense, say $3,000 (which they still have to pay in the full amount), they would only get back $600 from the government.

So, please stop using that "tax deductions" argument in trying to justify denying landlords fair rent. It's lame!
Last edited by BC Landlord on Aug 26th, 2021, 11:04 am, edited 4 times in total.
BC Landlord
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Re: Rents going down ...

Post by BC Landlord »

foenix wrote: Aug 26th, 2021, 9:17 am ... you seem to think the rents goes up all the time due to "rent control".
They do, and for that very reason. But you are blinding yourself by trusting the government too much. Some people should start thinking for themselves.
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Rejigger
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Re: Rents going down ...

Post by Rejigger »

foenix wrote: Aug 26th, 2021, 9:42 am
Rejigger wrote: Aug 26th, 2021, 9:12 am
If you're familiar with taxes, then you would be talking about depreciation/amortization and how it typically reduces NET RENTAL INCOME to zero.

And if someone argues that a landlord "doesn't have to take depreciation", then that same someone cannot complain that landlords don't spend money on upgrading their rentals. Those two arguments contradict each other, so no need to go there.
I guess you aren't that familiar with rental taxes either. As far as I remember, depreciation/amortiztions aren't used in the calculation of the year to year gross rental income.

I don't see "depreciation" as one of those yearly deductions to generate an income, you?
First, I wrote NET rental income and you wrote GROSS rental income.

Second, explain how yearly deductions generate income. This one is new to me.
~
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Rejigger
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Re: Rents going down ...

Post by Rejigger »

foenix wrote: Aug 26th, 2021, 9:42 am As far as I remember, depreciation/amortiztions ...[snip]... are used when "improvements" are made for the capital assets.
Not just for "improvements" but on the entire asset, excluding land. Building, furniture and equipment can be depreciated right from the get-go, minding the half-year rule. Capital improvements are added to the building and begin depreciating in the year of completion, minding the half-year rule.
I don't see "depreciation" as one of those yearly deductions to generate an income, you?
Hmm, I don't see depreciation on that list either. I guess the take-away is that one shouldn't rely solely on the interwebs for a complete picture.
~
foenix
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Re: Rents going down ...

Post by foenix »

BC Landlord wrote: Aug 26th, 2021, 10:35 am
foenix wrote: Aug 26th, 2021, 9:08 am
The example is not only hypothetical, it's a ridiculous made up example in trying to fit a narrative.
...
Why not use some believable numbers but then again, if one did that, the narrative falls apart, hey?
The example I used above was to illustrate (and simplify) for you that the less taxes you pay, the less you can save by claiming expenses (tax deductions). In this case (basic, aka personal amount) that would be $0.00, ... zero, nada in savings. But if you want some real numbers, ... here it is:

The vast majority of small landlords (mom & pop style) would sit in $13k-43k taxable income brackets. So, by claiming their rental expenses, they would only save about 20% (federal and BC income tax rates combined). So for example, by claiming property tax as an expense, say $3,000 (which he still has to pay in the full amount), he would only get back $600 from the government.

So, please stop using that "tax deductions" argument in trying to justify denying landlords fair rent. It's lame!
Please stop lying. The vast majority of small "mom and pop" style landlords would make more than the Canadian definition of "poverty". What you are saying is that these "mom and pop" landlords are below the taxable income for people in Canada that are considered in "poverty". That's certainly not too believable.

Regardless, it looks like it's sunk in that the rental expenses used to generate revenue is taken directly out of gross rental income and then that net income is added to one's overall gross income for the year then after all the other personal deductions are applied results in your net personal taxable income which is then used to figure out taxes owing depending on how much income tax was already paid during the year.....but nice effort in trying to confuse what we were discussing......but certainly, I would keep using the accountant, it's a smart move!! :biggrin:
Screenshot 2021-08-26 at 11-02-58 LICO Table 2020 - Low Income Cut-Off Canada.png
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foenix
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Re: Rents going down ...

Post by foenix »

Rejigger wrote: Aug 26th, 2021, 10:59 am
foenix wrote: Aug 26th, 2021, 9:42 am

I guess you aren't that familiar with rental taxes either. As far as I remember, depreciation/amortiztions aren't used in the calculation of the year to year gross rental income.

I don't see "depreciation" as one of those yearly deductions to generate an income, you?
First, I wrote NET rental income and you wrote GROSS rental income.

Second, explain how yearly deductions generate income. This one is new to me.
~
Yes, correct, net rental income is after the yearly allowable deductions are taken, the gross rental income is before the deductions. It's hard sometimes in keeping track of using those terms.

You forgot the "to" as in....
those yearly deductions to generate an income
...as in "rental income'

Regardless, do you see depreciations as one of those re-occuring yearly deductions TO generate the rental income for the year?
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Rejigger
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Re: Rents going down ...

Post by Rejigger »

foenix wrote: Aug 26th, 2021, 9:13 am
Rejigger wrote: Aug 26th, 2021, 8:58 am
Please share your definition of a "good" tenant. What are the standards they have to meet in order for you to consider them a good tenant?
~
Good tenants are the one that follow the rules set out by the landlord and the tenant agreement signed between the 2 parties spelling out the terms in a written agreement.
So basically "good" tenants are average tenants (that's a really low bar). And "good" average tenants only need follow the lease agreement and the Act. This is the bare minimum that any tenant should do. So why do you sarcastically wish BC Landlord "luck" with finding the next tenant? One might get the impression that you believe most tenants are terrible. You seem to believe there's a high probability that BC Landlord will end up with a tenant who won't follow the lease agreement and the Act. That's interesting.
~
foenix
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Re: Rents going down ...

Post by foenix »

Rejigger wrote: Aug 26th, 2021, 11:15 am
I don't see "depreciation" as one of those yearly deductions to generate an income, you?
Hmm, I don't see depreciation on that list either. I guess the take-away is that one shouldn't rely solely on the interwebs for a complete picture.
Have at it, it's also on a CRA website. The reason you don't see depreciation on that list is because it's not allowed in figuring out net rental income for the year. One would know that if one is in the rental game and did their own taxes.
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Re: Rents going down ...

Post by Rejigger »

foenix wrote: Aug 26th, 2021, 11:27 am
Rejigger wrote: Aug 26th, 2021, 10:59 am

First, I wrote NET rental income and you wrote GROSS rental income.

Second, explain how yearly deductions generate income. This one is new to me.
~
You forgot the "to" as in....
those yearly deductions to generate an income
...as in "rental income'

Regardless, do you see depreciations as one of those re-occuring yearly deductions TO generate the rental income for the year?
Okay, explain how those deductions are used to generate income as you stated earlier. Explain how depreciation expense generates income. I genuinely want to know as I've never heard this argument before.
~
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Rejigger
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Re: Rents going down ...

Post by Rejigger »

foenix wrote: Aug 26th, 2021, 11:27 am

Yes, correct, net rental income is after the yearly allowable deductions are taken, the gross rental income is before the deductions. It's hard sometimes in keeping track of using those terms.
Gross rental income are the rents collected. Net rental income is after all deductions are taken. Depreciation may be deducted, meaning it's an allowable claim against gross income. And depreciation will often times be used to bring net rental income to zero.

As I stated earlier in this thread, most landlords are in it for the long game because there's very little, if any, net income in the short term of a rental.

But, hey, maybe you're right and I don't understand taxes.
~
Last edited by Rejigger on Aug 26th, 2021, 11:47 am, edited 1 time in total.
foenix
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Re: Rents going down ...

Post by foenix »

Rejigger wrote: Aug 26th, 2021, 11:32 am
foenix wrote: Aug 26th, 2021, 9:13 am

Good tenants are the one that follow the rules set out by the landlord and the tenant agreement signed between the 2 parties spelling out the terms in a written agreement.
So basically "good" tenants are average tenants (that's a really low bar). And "good" average tenants only need follow the lease agreement and the Act. This is the bare minimum that any tenant should do. So why do you sarcastically wish BC Landlord "luck" with finding the next tenant? One might get the impression that you believe most tenants are terrible. You seem to believe there's a high probability that BC Landlord will end up with a tenant who won't follow the lease agreement and the Act. That's interesting.
~
Because there are plenty that don't follow that agreement. Our agreement that they had to sign was around 5 pages....so it was pretty extensive and if they followed it, they were "good" average tenants. I didn't say all or most of them are the "bad" ones. It only take just that one "bad" apple that can wreck you're ROI for the year.

I said there is a high probability he will come across one of those "bad" tenants in his landlord career.....a very high probability.
foenix
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Re: Rents going down ...

Post by foenix »

Rejigger wrote: Aug 26th, 2021, 11:35 am
foenix wrote: Aug 26th, 2021, 11:27 am
You forgot the "to" as in.......as in "rental income'

Regardless, do you see depreciations as one of those re-occuring yearly deductions TO generate the rental income for the year?
Okay, explain how those deductions are used to generate income as you stated earlier. Explain how depreciation expense generates income. I genuinely want to know as I've never heard this argument before.
~
What's the babbling about, it was you that stated this.....
Rejigger wrote:If you're familiar with taxes, then you would be talking about depreciation/amortization and how it typically reduces net rental income to zero.
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Last edited by Catsumi on Aug 26th, 2021, 8:53 pm, edited 2 times in total.
Reason: Baiting
foenix
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Re: Rents going down ...

Post by foenix »

Rejigger wrote: Aug 26th, 2021, 11:41 am
foenix wrote: Aug 26th, 2021, 11:27 am

Yes, correct, net rental income is after the yearly allowable deductions are taken, the gross rental income is before the deductions. It's hard sometimes in keeping track of using those terms.
Gross rental income are the rents collected. Net rental income is after all deductions are taken. Depreciation may be deducted, meaning it's an allowable claim against gross income. And depreciation will often times be used to bring net rental income to zero.

As I stated earlier in this thread, most landlords are in it for the long game because there's very little, if any, net income in the short term of a rental.

But, hey, maybe you're right and I don't understand taxes.
~
You're right, you don't understand how net rental income is calculated for tax purposes if you think capital depreciation can be deducted from gross rental income for a property for the year. I would suggest more research is in order.

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