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Posted March 9, 2024 by Rental Advisors

Tax Tips for Renters

As tax season approaches, renters may find themselves wondering if there are any benefits available for them to alleviate some of the associated burdens. Whether you’re a first-time renter or a seasoned tenant, understanding tax implications will make navigating the process much easier. In this blog, we will explore some of the strategies and credits you may be eligible for to help potentially lighten your tax load.

In general, rent payments do not qualify for tax deductions in Canada. They do not have the same benefits as homeowners who can claim mortgage interest and property taxes. However, there may be some exceptions and credits that can help renters out when taxes are due.

First, there are tax credits in Ontario, Quebec and Manitoba that are connected to eligible rent payments. These are the Ontario Trillium Benefit (OTB), the Solidarity Tax Credit, and the Education Property Tax Credit respectively. With the goal of assisting people with low-to-moderate income, each one comes with tits own rules, regulations and eligibility factors. If you are applying for one of these credits, reach out to your landlord and ask them for a rent receipt. This will need to include the landlord’s name and contact information, the address of the rental property, how long the tenant has lived in the home, dates for when rent payments were made, the total rent paid during the tax year and the landlord’s signature. This will help prove your case to the committee and heighten your chances of getting the credit.

You can also deduct rent payments if they are for self-employment purposes or in a work from home situation. While the amount that can be deducted differs across provinces due to different conditions, the self-employment credit often looks into the percentage of space that the business occupies. Form T2125 can help assist you with this claim. For those who work from home, there are specific criteria that need to be met to apply for this benefit. Have your employer fill out Form T2200 to determine your eligibility.

If you are subletting a portion of your rental property, you must claim this income on your tax return. There can be deductibles for things such as utilities or maintenance costs, but only on the portion of the house that is rented out. This needs to be applied to the duration that the area was rented for. Conduct some research to determine how much of a deductible you may be eligible for.

Throughout the year, it is important to keep all of your records in a safe, secure spot. This should include rent payments, bills, receipts and any other documentation to related expenses that were made throughout the year. Having accurate records will help make the tax process easier and outline if you can claim any applicable credits or deductions. It is important to be honest and transparent when filing your taxes. All claims need to be compliant with the Canada Revenue Agency’s (CRA) requirements. As well, make sure they are filed on time. The last day to submit your tax returns is April 30th every year. If you are struggling to find all the necessary paperwork or complete it on your own, seek out a tax professional to help you complete the task quickly and accurately.