Lessening Rental and Employment Income Tax Bleed
I have been daydreaming about a new plan for 2018 – a new rental condo in the Coquitlam, BC area, but with the smallest downpayment possible and a means to get out of paying so much tax:
– Mortgage interest is a tax write-off.
– Claim CCA (depreciation) tax deduction on the physical property; 4% of value.
– Mathematically, ROI (return) is profit/initial investment, so this pushes for the highest one possible.
e.g. $500,000 condo.
“Losses” for the year: 20000 CCA, 9771 interest, 5000 condo fees and property tax, 1500 legal fees, 6000 land transfer tax.
$42271 – 21600 (1800/mo.) rent income = Total $20,671 rental losses ($671 currently realized).
Based on this, I’d be forcing my profile into a current rental loss scenario… pay 0 tax on any rent I get from it, and also be able to drive truck part of the year tax free. $15,409/month will likely be the most I’d ever make running someone else’s truck (for which normally, I pay 6318 of tax).
Taking the halfway point of historic appreciation rates and ones of late, expecting +$70000 YoY in condo value; 69329/107500 = 65% ROI
Or, another method w/ absolutely minimal down: 62184/32500 = 191% ROI
Then, in a perfect world, buy my own truck(s) and go just run my own trucking outfit. I will still work elsewhere or drive one of them myself at the same time. Where trucking running costs, my wages to the driver(s), and the deprecation of the trucks will also be tax write-offs.
However, the ever-tightening new mortgage regulations, and the 2-year lag time for on-paper income to take full effect for financing purposes, make such a strategy extremely difficult.