Can you claim lawyers fees when you buy and house? And can you claim the interest on your mortgage? I've been hear conflicting stories on this. Thanks
Tax Question (Canada)
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The second question is easier for me to remember because I remember it from my tax courses in school. The answer is no. Canadian income tax does not make deductions for interest on mortgages and loans. This is in contrast to what happens in the United States where interest is deducted.
The first question I am not so certain but from what I am aware of, the lawyer costs are not expenses but are part of the purchasing price of the house and thus are to be included in the capital cost of the house.
The first question I am not so certain but from what I am aware of, the lawyer costs are not expenses but are part of the purchasing price of the house and thus are to be included in the capital cost of the house.
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I'm afraid not but if you use your house for business purposes you can claim mortgage interest for the portion you used for an office or equipment storage or whatever. It's calculated on the percentage of square footage you use for business.
You can claim interest on the mortage of a rental property. And any maintenance etc. They are credits that go against the taxable income gained from rent.
Other wise, no.
You can claim a portion of household expenses if you operate a home business, or work out of your home. If your house has 5 rooms (kit, liv, 3 bed), and you use one of the bedrooms as an office for work, you can claim 1/5 of all household operating expenses. Best if you also show you use that space and that space only for work. Also helps if you have a business license (check your zoning) otherwise the feds may decide you're not really working from home. Even if you are. But it's their call, not yours.
One exception of note:
If you move more than 40 km, in order to live within 40 km of your place of employment, you can claim moving expenses, including home purchase and sale costs.
Eg. you live in town A, which is 90 km (>40) from town B where you work. You move 55 km (>40) to town C which is only 35 km (<40) from your work. (I lived in Sooke, worked in Ladysmith, moved to Duncan to be closer to work and claimed moving costs.)
This also works if you move between towns for work. We moved to Victoria from Calgary on a whim. Got a job within 6 months of moving. All moving expenses were tax deductible.
Other wise, no.
You can claim a portion of household expenses if you operate a home business, or work out of your home. If your house has 5 rooms (kit, liv, 3 bed), and you use one of the bedrooms as an office for work, you can claim 1/5 of all household operating expenses. Best if you also show you use that space and that space only for work. Also helps if you have a business license (check your zoning) otherwise the feds may decide you're not really working from home. Even if you are. But it's their call, not yours.
One exception of note:
If you move more than 40 km, in order to live within 40 km of your place of employment, you can claim moving expenses, including home purchase and sale costs.
Eg. you live in town A, which is 90 km (>40) from town B where you work. You move 55 km (>40) to town C which is only 35 km (<40) from your work. (I lived in Sooke, worked in Ladysmith, moved to Duncan to be closer to work and claimed moving costs.)
This also works if you move between towns for work. We moved to Victoria from Calgary on a whim. Got a job within 6 months of moving. All moving expenses were tax deductible.
When I ran a home based consulting business, the person I spoke to at Revenue Canada said percentage of rooms, not square footage. 1 room out of 5 and you get 20%, even if that room is 6x10 in a 1500 sqft house.
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The line on the tax form gives both as options, so long as you arrive at a percentage for the calculations.
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If you run your own business from home, you can claim your mortgage interest. We do every year. The accountant sorts out all the percentages, etc. allowed. Don't know about the lawyer fees though, sorry.
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One thing to keep in mind is not to go too crazy on deductions on your home based business. We take some but keep it in check because, when you sell your home you may be faced with paying capital gains. Normaly you don't on a principale residence but if you rent your house out or take deductions, those will count against you at time of sale.
Be reasonable and it's all good.
We take a tiny portion, on all roughly 5-10%, of hydro, heat, taxes, (we don't have a mortgage) based on the number of rooms. Keep in mind though, the room must be exclusive. It can not be the corner of the den where the rest of the room is used by the family for TV watching or where the children play. It must be used exclusively as your office space.
Be reasonable and it's all good.
We take a tiny portion, on all roughly 5-10%, of hydro, heat, taxes, (we don't have a mortgage) based on the number of rooms. Keep in mind though, the room must be exclusive. It can not be the corner of the den where the rest of the room is used by the family for TV watching or where the children play. It must be used exclusively as your office space.
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