In Today’s Finance Minute, let’s talk about what first time investors don’t know about owning rental properties.
- Because homeowners pay for their mortgage with their salary, they forget that when they own a rental, they are not paying for it-the tenant is. Some worry their salary will have to cover two payments. I remind them their tenant’s salary has to cover the mortgage payment.
- Because homeowners in Canada cannot write off the interest on their mortgage, they think the same thing with their rental. I tell them you can write off that interest on your rental property, even the interest on the down payment that you borrowed, even the penalty that you had to pay, and the legal fee, property tax, strata, and every single cost you had to spend In order to acquire your rental property. Of course, what I am claiming here is my opinion, you need to work with an awesome accountant who specializes in working with investors to make sure you claim all that you can claim.
- Rental property interest rates are higher than your personal mortgage rates. But wait, it’s actually cheaper, because unlike your personal mortgage, you can write off the the interest, so the interest rate you are paying, deduct 20% from that…and sometimes more depending on your tax rate. It may look more expensive, but it is actually cheaper in the long run for you.
These are just some of things you don’t know that you don’t know that we teach our investors. Please like and share to help others know them too.