Should I Invest In A Rental Property?
Rental Property: Deposit Photos
Some taxpayers believe that investing in a rental property is a better alternative to mainstream investing. If you are considering investing in a rental property there are some pros and cons to keep in mind. In most situations you will be required to claim the rental income earned.
One advantage is that you will be able to deduct from this income the expense of mortgage interest, property taxes, utilities, insurance, management fees, maintenance and other costs of upkeep.
Secondly, if the net rental income results in a loss, then this negative income can reduce other income you must claim (employment, investment, etc) on your return. Depending on the size of your mortgage, you may earn positive cash flow at a better rate than regular investments.
A key factor to consider before embarking on owning a rental property is to ensure that you have the time and energy to become a landlord. Difficult tenants and emergency calls may be an unanticipated result of owning a rental property. Your property may not experience the increase in value over time that you had hoped for and additionally may not be easy to sell.
And finally, given recent and significant changes in Canadian mortgage rules, do your homework to ensure that you can qualify for a mortgage.
Meet with a tax professional to ensure that you understand all of the advantages and disadvantages of owning a rental property.
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