If you’re considering renting versus purchasing a home, there may come a time when you have to make the tough choice between renting and buying.
If you need to downsize because your children have left or you feel your current living situation is being underused, it might be difficult to decide whether to rent or buy another property. Tax Accountant Toronto team will assist you in making that important decision with the help of some useful information below regarding renting versus buying a home.
Tax Accountant Toronto team state that there are times when renting a property is less expensive than buying one. For example, if you buy a condo, you’ll have to pay routine monthly charges such as maintenance and utilities, as well as property taxes, insurance premiums, and other expenses. This may add up to thousands of dollars over the course of a year.
Tax Accountant Toronto team state that when you buy a home, it’s usually considered to be a long-term investment. When you go down the path of acquiring a property, don’t expect to start receiving investment income right away.
Over time, houses frequently appreciate, so the value of your home may be twice as much in ten years or more.
Did you know that by renting out your home, you may take advantage of tax benefits? Being a landlord has its advantages. You may reduce your taxes payable and save a lot of money by claiming certain expenses.
They can also be deducted from your tax payment depending on the proportion of your home that is rented out, for example, if you spend money advertising the house for sale or on other expenses like insurance, maintenance, and upkeep.
However, in Canada, you cannot deduct mortgage interest paid on your primary residence when filing taxes. There is an exemption to this rule if you rent out your property and can claim a portion of the interest as a tax deduction.
Tax Accountant Toronto team speculate that you may designate one of your properties as a principal residence for each tax year on the CRA. If you rent out part of your house, you can still call it your primary residence as long as you live there for at least half the year. For tax purposes, you can choose to be a resident of various homes each year.
However, if you decide to sell the property for the period of time when it was not your primary residence, you’ll have to pay capital gains. Make sure you keep track of the rent you receive as well as any expenditures made.
When you compare the pros and cons of both options, you’ll find that there’s a lot to think about when deciding whether to purchase or rent a home. If you want quick investment gains, selling your property and investing the proceeds may be a smart option.