How Credit Score works & is calculated

Credit score, also called as the Beacon score or FICO score is a credit scoring model proposed by Fair Isaac and Company. FICO scores are calculated based on information in your credit report which resides with the three major credit bureaus. The information contained in your file is compared to the information that exists in other consumer credit reports and derives a numerical score called the FICO score.

FICO Scores are calculated from a lot of different credit data in your credit report. This data can be grouped into five categories Payment History, Amount Owed, Length of credit history, new credit and the Types of credit used.

Continue Reading

Let Canadian Taxman or your Employer pay your Moving Costs

Being a Canadian Professional Real Estate Investor, you need to educate themselves about Canadian taxes. We pay taxes from the day we are born till our death. Majority of Canadian Professional Real Estate Investors do not pay attention to the taxes. Canadian taxes can be two way street. We also need to learn how to claim all our eligible expenses when we move?

This article can save Canadian Professional Real Estate Investor thousands of dollars provided they utilize the guidelines based upon Canadian Revenue Agency.

When a Canadian family or individual  moved at least 40km to be closer to a new job, to run a business, or to attend a post-secondary educational institute full time, then you may deduct moving expenses, up to the amount you earn at the new location, or up to the amount of award or scholarship income received in the year.  You may carry excess expenses forward to be offset from income earned at the new location in the next year.

Canadian taxes can be quite complex. Having a experienced Chartered Accountant means you pay what you need to pay, not a penny more  says Navtaj Chandhoke, founder of World Wealth Builders, a Canadian Real Estate investors education and mentoring center serving Canadians since 1993.

Many costs are deductible as moving expenses, including:Transportation and storage costs for household effects.Travel, including vehicle costs and reasonable costs for meals and accommodations in the course of moving the taxpayer and members of the tax payers household from the old residence to the new residence.

Costs of canceling a lease for the old residence.
Real estate commission, advertising, legal and other costs re selling the old residence

Legal fees re the purchase of a new home, and any tax, fee or duty (other than GST or value-added tax) imposed on the transfer or registration of title to the new residence.

Costs re maintaining the old residence, up to a maximum of $5,000, while the old residence is either vacant, or not occupied by any person who ordinarily resided with the taxpayer at the old residence immediately before the move, and while the old residence is not rented by the taxpayer to any other person. These costs are deductible as long as reasonable efforts are made to sell the old residence.

Change of address costs, such as replacement of drivers' licenses, non-commercial vehicle permits, and costs of connecting or disconnecting utilities.

Note that if your employer has reimbursed any moving costs, then the moving costs must be reduced by the amount received, unless the reimbursed amount is included as income elsewhere on your tax return.

Top 10 Tax Saving Tips for Canadian Real Estate Investors 

There are two things certain in life, death and taxes. Majority of Canadians do not understand the complexity of taxation." A major portion of your earning goes toward your taxes which can be as big as 46-80% of your total earnings. Knowing a little about taxes can save you huge amount of money" says Navtaj Chandhoke, founder of Professional Real Estate Investors Group (PREIG) Canada.

Here is brief description of top ten tax saving tips. These are simple guidelines and are not rendered as professional advice. Your Chartered accountant can assist you professionally.

In its T4036 Guide to Rental Income, the Canada Revenue Agency provides a number of questions you can ask yourself to help determine whether an expense is current or capital in nature. For example, you replace wooden steps with concrete steps, it's a capital expense. But if you simply repair the wooden steps, the expense is currently deductible.

Dont exaggerate your home office expenses. This is a red flag for the CRA. There are always exceptions, but a good rule of thumb is a maximum of 25 per cent as the business share of heat, hydro, property taxes and so on.

Keep a careful log of car expenses. This is another red flag for CRA.

If you run into trouble or make a mistake, call the CRA. Most times they will be very helpful, especially if you call before the crunch.

Whatever you do, dont ignore communications from the CRA, respond promptly and make notes of your conversation right on the letter for future reference.

Unless you are incorporated you are required to complete a Statement of Business and Professional Activities (T2125) at the same time as you file your personal taxes.

Dont wait until the last minute. Its impossible to get yourself properly organized under eleventh-hour time pressure and its difficult to make good decisions to minimize your taxes.

Make an estimate of your expected tax bill. If your revenue is going to be high, you might consider making that machinery or computer purchase before years end. Youll defray some of the expense through capital cost depreciation.

You should set aside 30 to 40 per cent of your gross income to cover income tax and CPP. Even if you are the only employee of your business, you are responsible for paying the employee and the employer CPP contributions.

Keep proper records differentiating business from personal If you cant prove it, the CRA will likely assume the expense is personal. Use the categories provided by CRA on the T2125.

Let the Canadian Taxman pay for your Moving Costs!

How can you do that?

As a full-time Canadian real estate investor, you should be very aware of the tax exemptions that are available, helping to save you time and money! Generally, for these exemptions to be viable, your move must be from one place in Canada to another place within Canada.

  Continue Reading