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Wednesday February 1992 Renting a room can bring extra income By Joanne CA If you have llic space and ihc inclination for renting out a room or two or a basement apart is not a bad idea It could be a good source of ad income say for empty rclircdcouplcsorwidowcd persons Extra income is always useful and it certainly helps with the in creasing costs of running your home But the thing about rental income just like any other in come is that it taxable So you re obliged to report it Any and all expenses you incur in renting out a portion of your home are deductible against the rental income you received Any net rental loss before deducting building depreciation can be dc ducted against salary pension investment or any other kind of income So that clear enough But what sort of expenses arc you allowed to deduct The simple answens justas long as they re directly related to earning rental income Thescmightincludc the cost of advertising your room orrooms for rent They portion of your total home expenses likemortgage interest taxes heat light and water tnsur and maintenance So if you have a six bedroom house and you rent out two of those rooms your allowable ex pense deductions could be one third of your total expenses The other two thirds arc considered personal use and arc therefore not deductible If you have to buy extra furniture beds dressing tables and so on specifically for your rented rooms this would also be a deductible expense as capital cost allowance depreciation Other deductible expenses would be things like ex tra bed linens and towels Even smoke and heat detectors What other kind of expenses might you deduct Well if you have to pay for maintenance or repairs or painting or wallpapering then costs arc also deductible As arc wages paid to domestic help for cleaning And if you have any accounting expenses to determine your net rental income or loss for your tax returns or legal fees lis Computer Bookkeeping Services 37 Main Streel South Halton Hills Georgetown Ontario L7G3G2 877 5656 Is T4 Preparation Getting You Down Let us prepare hem for you T5 Preparation Return Return We also provide Monthly quarterly or yearly bookkeeping Monthly financial statements Amortization schedules Payroll EHT PST GST Remittances Call Us Today And Let Us Know How We Can Help You for drawing up lease agreements these too are deductible Since you probably want your place to look nice for your tenants you may want to do some land scaping a portion of which could also be deductible And the same thing with mowing the grass or clearing snow if you pay someone else to do it for you And don forget insurance You d probably have to take out addi coverage in thecventone of your tenants falls down the basement steps One lawsuitcould wipe out your income is general financial advice by Canadas chartered accountants Joanne is with Hewitt Associates Families can share financial problems Sweating under the collar both blue and white seems to be the order of the day for Canadians edgy about the economy As shut down and corpora lions slim down more and more families art facing financial pro There art tough money decisions to be made the course of making those decisions most families keep their children the dark If in stead parents would take the lime to shed a little light on the family financial situation their children would not only feel more secure they would learn valuable lessons about handl money Next tune you down pay the family bills Iry including your older children Given them an overall idea of the family monthly expenses up some specific expenses sue as groceries or television which affect them directly Also show them wha portion of your monthly or annual paychequc goes into savings giving them a percentage rather than a specific dollar figure The point of the exercise is not to worry or bore them but to inform then After all one of the reasons that many adults arc not good at finances is that no one ever took the time lo teach them Younger children can learn about money in a number of ways If your 10year old thinks he can I live without a particular brand of running shoes but you are unwilling to the bill for them try working out a deal If you kick in half he could earn the other half through doing extra chores around the house or the neighborhood When you help your children establish goals they will learn about planning If your child receives a gift of money take the time to discuss options If the money is spent now what will it buy If it is put in the bank perhaps along with allowance earnings from chores or other gifts of money what will it buy later Explain how savings earn interest Another option might be for your child to take a THE AGENT WHO CAR AND HOME CAN ALSO PROTECT YOUR FAMILYS FUTURE For life insurance that can provide financial security for those you love call PHIL KARDA J State Farm Sells Life Insurance State Farm State Farm Life Insurance Company Canadian Head Office Scarborough Ontario portion of the gift money or earn ings to spend now while also put ling a portion of it in the bank Let your child make his or her own decision If she decides to save her money have her deposit it in the bank herself so that she learns to fill out deposit slips deal with tellers and update her passbook Feeling confident at the bank and knowing how to make smart money decisions will pay off throughout her life And don forget that children are as apt lo give as to spend Almost all children collect for or enter bikea thons or walk a Introduce them to the concept of donating their own cash by letting them know you give to chanties too For advice on TV see Your Wealth available on broad cast channels in Ontario and on satellite across Canada or see Money in the Bank on your com cable channel Is general financial by Canada s chartered countanls Lorraine Bell is a self employed financial consultant Formerly Barber Henley Ltd PERSONALIZED SERVICE rom Proven Financial Insurance Professionals Our experts will meet with and explain vour options while providing vou with answers to our Financial and Insurance concerns Competitive Interest Kates Group Plans lexible Life Insurance Plans INSURANCE BROKERS 105 Queen St Brampton If you qualify you can get a cheque for 85 of the first 300 of your tax refund and 95 of the rest Plus your tax return will be prepared at no extra charge So why wait for the refund cheque to arrive by mail Ask about Cosh Back at HR Block and get your refund fast 7 James St Georgetown 416