Learn how to efficiently manage and edit a client’s rental property data
Use the Rental Properties Card to model rental properties your clients currently own or plan to own in the future. A plan can include multiple properties, but all rental cash flows are managed through a single default rental property operating account.
Accessing the Rental Properties Card
To access the Rental Properties Card, navigate to the client’s Current Data page and locate the Financial Data section. This is where you can view, manage, and update all rental property details for the client.
Operating Account
Rental Property Operating Account:
The operating account is a default feature of the Rental Properties Card and cannot be removed. By default, its starting and minimum balances are set to zero. All rental revenues are deposited into this account, and rental expenses are deducted from it.
Distribution Frequency and Destination:
The distribution frequency can be set from daily to annual disbursements. Distributions can be directed to a bank account, non-registered investment, or cash flow (the default option).
Distribution Process:
At the end of the specified time period, any balance exceeding the minimum amount is automatically disbursed to the chosen destination. For example, with a monthly frequency, the excess balance is distributed at the end of each month. The distribution amount equals the difference between the available balance and the minimum balance.
Existing Rental Property
You can add an Existing Rental Property by clicking the "+ Rental Property", and then selecting "Existing Rental Property".
- To the left of each Rental Property, there is a Trash Can Icon to delete it.
- To the right of each Rental Property is a More Data (Pencil) icon that allows you to specify more details about the Rental Property.
Information tab
The Information tab collects basic details about the rental property, including its description, ownership, current market value, purchase amount, and yearly growth rate.
CCA
CCA (Capital Cost Allowance) can be defined for future rental properties. The capital cost represents the amount paid for an asset, and enabling the Claim capital cost allowance option applies a tax deduction of up to the allowable CCA claim against rental income. However, CCA cannot be claimed on land values. Separate tracking is available for the Building and Equipment categories, with the undepreciated capital cost (UCC) representing the current balance for each class. CCA recapture occurs when an asset is sold for an amount higher than the UCC, up to the original cost. Recapture is applicable to the Building category.
When allocating sale proceeds, equipment is sold at UCC value, and remaining proceeds are divided between land and building based on their original cost ratios. The tax implications of CCA, including deductions and recaptured depreciation upon sale, are supported for properties owned by individual plan members. Additionally, the income tax form T776 includes details on CCA/recapture, with a supplementary form for Area A of the T776 added to streamline reporting.
Rental Incomes
The Rental Incomes tab allows you to set up multiple income streams, enabling the documentation of separate streams or accounting for significant changes in income over time. Each income stream requires a description, income amount, frequency, start date, and end date, with the end date defaulting to Last to die but adjustable as needed. Additional options include indexing income to inflation and applying an additional index rate for further adjustments.
Rental Expenses
The Rental Expenses tab allows you to set up multiple expense streams associated with a particular property, enabling detailed documentation of separate expenses such as utilities, taxes, and repairs. Each expense requires a description, amount, frequency, start date, and end date, with the end date defaulting to Last to die but adjustable as needed. Expenses can also be indexed to inflation, with an additional index rate option available for further customization.
Asset Sale
Rental properties can be sold in the future, with the proceeds directed to various destinations, including a non-registered account, a bank account, a lifestyle asset, other rental properties, or directly into cash flow.
Future Rental Property
The Rental Properties Card now includes the ability to add Future Rental Properties, enabling you to incorporate planned rental properties into the plan. The information required for future properties follows the same structure as existing rental properties, with the added option to specify a future purchase date.
Since a Future Rental property represents a planned purchase, any associated rental incomes and expenses entered will only take effect starting from the specified purchase date.
If the property has already been purchased, you can update its status by selecting the Convert to Existing Rental option at the bottom of the Information tab.
If you need to sell a rental property, the Asset Sale Tab allows you to choose where to direct the sale proceeds. Additionally, if a future liability is created, it can be linked to a future rental property asset, ensuring that the proceeds from the asset sale are automatically directed to settle the liability.