A Tax payment question?

Question

I am a full time employee and my salary is tax-paid by the company I work for. Lets say my income is 40 grand after paying tax, meaning I have this money in my pocket and its all for me.

Now, if I give my house to rental, and earn 12 grand a year, how do I calculate my income tax?

Does my primary job have anything to do with my tax payment?
If so, how is it related?

Thank you.

Answer 1

Ignore Judy and Gary's advice since they're quoting a US tax scenario and you clearly posted in Canadian tax.

Considering your rental income, you'd report your rental income on your tax return as rental income. You'd also be entitled under the income tax act to deduct expenses you incurred to earn that income such as:
- property tax on the rental property
- legal fees on drafting rental agrrements, or collecting unpaid rent
- interest on any loans to acquire the property

You're primary job is in no way connected to your rental income, so your employer is not required to deduct money from your paycheque for your other business. You can voluntarily request that they do so, if you really want to.

You may be in a situation that you owe money to the CRA at the end of the year, but that's fine.

Answer 2

You'll fill out one 1040 with both the job income and the rental income, and add those together and then calculate your income tax.

The amounts from your job W-2 will go directly onto the 1040 form. For the rental, you'll use a schedule E - there are most likely a number of deductions you can take for expenses, so the whole $12K won't be taxed - you put the $12K rent you received, and any allowable deductions, on the schedule E, and put the number from the bottom of the schedule E onto your 1040.

Answer 3

This income would be added to your total income and become taxable. However you can now write off the expenses to maintain the rental unit. So actual income should be lower. Any repairs that have to be conducted on the rental and all materials used are taken out of the income as income related expenses. This is like being self employed.

Note that you might want to hire repair men rather than do it yourself as the bill they give you matters for tax purposes.

So yes it adds to your total income, less related expenses gives you your net taxable to add to your other income.

To be sure of all the nitty gritty things bounce it off a local tax preparer or an accountant who handles realestate accounts.

Answer 4

If you are receiving rental income then you have to complete a Schedule E and attached it to your 1040 form. By the way receiving rental income is consider as "passive income". You can download instructions, pubs and forms from the IRS at: irs.gov

Answer 5

I think you add both incomes together.. job and rental then calculate your tax bracket.. the percentage.. then subtract what you have already paid from your job and the remaining is what u owe.. thats why u need your t4 to see how much you have paid...

Answer 6

The after tax fee is going to symbolize the quantity you will certainly be out of pocket after deducting the activity money out of your tax. even if it is the $575 it is going back out of your financial enterprise each month, you will get the adaptation lower back in a tax refund on the tip of the 12 months.