Without reasonable expectation of profit, the CRA may disallow the rental losses. I recall reading that there were some 26,000 vacant properties in GTA early last year, and these properties had only expenses and no income. Many rental properties are in losses because they were recently bought at peak prices, with little downpayment (i.e., lots of interest charges), vacancies, and little effort was spent to rent out the properties. The CRA's computer may flag and examine those individual tax returns claiming rental losses in toronto or vancouver for first 2 yrs in a row. Another example is to start a tree farm business, which also takes years to see trees grown up for sale. The former takes yrs to materialise: land acquisition, construction, sales, etc. I dont think the time period allowable for REOP determination for commercial apartment development is comparable to individuals renting out condos or houses, as OP appears asking. apartments, that take a long long time to break even and start making profit. This link goes into a little more detail and lists the nuances and conditions where it would differ, not be considered a loss, etc:īut I think this time period would have to be quite a long time, as there are commercial developments, e.g. If you incur the expenses to earn income, you can deduct your rental loss against your other sources of income.” “You have a rental loss if your rental expenses are more than your gross rental income. If every dollar of income is taxed at your marginal rate, then it stands to reason every dollar of loss should lower it too. So, from what I can tell, yes, if you have a loss it would lower your taxable income from other sources. The income (loss) amount is a line item along with my other income streams (eg salary).
Someone more knowledgeable than I may validate, but the answer is yes.
If it's a loss, against what are we writing it off on our taxes? Is it my salary from my full time job? (I don't think that's allowed right?) This will be a dumb question and I'm too lazy to google.