Top five tax tips to minimize your 2015 personal income tax

2015 has been an amazing year.

I gave birth to my son in the middle of the year. Time really flies and he’s now a healthy 20lb baby in just less than half a year.

Our accounting practice grew substantially. We are still growing and we hired another staffer to help us out.

My biggest achievement in 2015.

My biggest achievement in 2015.

We are still working on the financing of our next purchase but looks like we will be firming up on the purchase of another rental property.

We grew Hamilton Basket Brigade from feeding 37 families merely one year ago to feeding 200 families this Christmas. Many families were thankful to your generosity to this event.

To top this off, we even watched Star Wars: The Force Awakens this past Monday. What an amazing movie! (Don’t worry, I am not going to give away any spoilers to anyone who has not watched this movie yet!) Let me just say this – it is so good, that Erwin and I already decided to watch it again.

Robin, the little bat girl, was cleaning up after the Hamilton Basket Brigade.

Robin, the little bat girl, was cleaning up after the Hamilton Basket Brigade.

So, what’s there to do for the last 8 days of the year?

Here are the five tips to minimize your 2015 taxes!

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  1. Take a picture of your odometer
    For the real estate investors who incur auto expense for their rental portfolio, it is important to keep a record of your odometer reading at the end of each year.
    This is the basis to record how much mileage you have incurred for this year and next year.
    All the expenses incurred for rental portfolio are prorated over the mileage you have driven for the year. See my mileage blog post for more details.
  1. Sold a property at a significant capital gain?
    If you have sold a property at a significant gain this year, you may want to consider selling any stock that you have in hand that have a capital loss.
    By realizing the capital loss, you are eligible to offset the capital loss against the capital gain you incur on the real property to lower your taxes.
  1. Contribution to your Registered Retirement Saving Plans
    Another way to lower your tax liability is to make contribution to your RRSP account.
    If you are one of the high income earners (making income for over $200K in your personal tax return), you are welcome by our Prime Minister Justin Trudeau’s new tax hike. You will be paying 3% more income tax on any income over $200K.
    For the high income earner, you may want to hold off your contribution to RRSP so that you can utilize the deduction for your 2016 income instead. You can achieve higher tax savings by deferring a portion of your RRSP contribution to 2016.
    Of course, always speak to your accountant to get the most optimal RRSP contribution amount. You have until Feb 29, 2016 to make contribution and still get a deduction in your 2015 year.
  1. Small business owners should pay themselves in 2015
    If you are small business owners that chose to bonus out some of your corporation’s profit, you should consider making such a payment before end of the year 2015 for the same reasons I mentioned above.
  1. Making a donation
    If you are planning on making a donation soon, you should also consider doing so in the remainder of the year. You will be able to claim the donation tax credit against your 2015 income.

IMG_20151221_095427_1For those of you who are considered the high income earner, it is more worthwhile than ever to setup a corporation to own your real estate portfolio in the corporation.

With only a few days left in 2015, let us celebrate the holidays with our families and friends.[/private]

Have a safe and happy Christmas.

Your real estate accountant,

Cherry Chan, CPA, CA

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation.
1 reply
  1. Navtaj Chandhoke
    Navtaj Chandhoke says:

    Very interesting article bringing up excellent points.The CRA’s online services are fast, easy, and secure. You can use them to help file your income tax and benefit return, make a payment, track the status of your return.But a good accountant is must for Canadian real estate investors.Thanks again!


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