Short term rental expense denials:
Beginning 1 January 2024, all expenses to non-compliant short-term rental properties would not be tax-deductible. A property is deemed to be non-compliant if it does not adhere to provincial, municipal licensing, registration and permit requirements. Additionally, a short-term rental property is one which is rented for less than 90 days at a time. For 2024 as a one-time transitional measure, owners had until 31 December 2024 to comply with local licensing and registration requirements to avoid penalties. If they complied by this date then they are deemed to be compliant for all of its tax year ended in 2024.
ACTION: Ensure you have your business license number for the short-term rental and retain for your records.
Are you planning your 2024 RRSP contribution?
Consider drawing from your TFSA contributions before 31 December 2024 (tax-free), and using those funds to contribute to your RRSP between 1 January 2025 and 3 March 2025 (rather than a RRSP loan). You can re-contribute the amount you withdrew from TFSA starting 1 January 2025, and you can deduct your RRSP contribution made in the first 60 days of 2025 against your 2024 taxable income, or claim a portion of the RRSP contribution as the required repayment amounts to Home Buyers’ Plan or Lifelong Learning Plan (if applicable). When you receive your tax refund from your RRSP contribution, you can re-contribute back to the TFSA (up to the contribution room).
Be sure to consult your investment advisor before making investment withdrawals.
ACTION: Check your RRSP contribution limit for 2024 (look in your 2024 Notice of Assessment). Check your TFSA contribution room (look in your CRA MyAccount). Consult your investment advisor about this cashflow strategy.
