Taxes, Taxes and More taxes 

A recent court case in Ontario shed some light on the need to understand the taxes your rental property is subject to. 


A landlord in Ontario who had rented their property as a long term rental elected to change it to short term rental. This type of rental often brings in larger monthly revenues, when the economy is good and people are travelling. The landlord elected to sell the property after it had been operating as a short term rental. What the landlord failed to understand and the courts upheld is that the short term rental changed the use of the property to a commercial enterprise meaning the sale of the property was subject to HST.  When selling a residential property that is lived in by a long term renter it is considered a “home” and is not subject to the HST tax. In this case the amount of tax charged to the owner is higher than the amount of revenue the owner earned while renting the property as a short term and long term rental.


When being a landlord, understanding the taxes one must pay is very important to understanding if you are able to make a profit on your rental property. We recommend you speak with a tax professional when owning a rental property. 


One of the most common missed taxes is the non resident tax. When an owner lives out of the country they are required to submit to the government no resident taxes. As an agent for the landlord we are required to submit this before we give any funds to the owner. We use the NR4 method which is 25% of the gross rent sent to the government upon collection of the rent.  


If you are not sure what taxes you are required to pay for your rental property we recommend that you speak witha tax accountant to ensure you are making the proper contributions.


Need help managing your investment properties. Cartref Properties can assist you, call today to discuss your needs. You can find more information about us at: www.cartrefproperties.com 

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