Tuesday, February 8, 2011

Tax Tip for Renters

Did you rent during 2010? Its worth a generous tax rebate so make sure you claim it on your return this spring!

Your rent is eligible for a tax refund and this is great news (I got $130 from this alone last year) - but only if you live and pay rent in Manitoba. Other provinces don't have this allowance.

So, if you rented...

1. Make sure you claim your rent.
2. Make sure you claim your rent properly.

Don't worry, it's pretty easy.

If you have an accountant do your return just tell him/her your rental information (address, # of roommates, monthly rent, # of months renting there in the current year).

If you do your own taxes you'll want to find the form "T1C-479". Its the provincial credits form. Should be on page two.

*Important*: If you live with roommates, only ONE of you should claim this on your return. That person should claim the full rent amount and split the proceeds from that refund. To do otherwise is a bad idea.

As always, fire away with any questions - all questions are good!


Karen and Tiffany share an apartment and split the rent evenly. They shared the apartment for the all of 2010. Between the two of them this is $950/mo.

They decide that since Karen will be the one to claim the rent. She enters their basic rental information including
the number of months they lived at the apartment and the total rent for the year ($11400) on her tax software. Karen will receive $650 on her return and pass on Tiffany's share ($325) to her.

Another Example:

Sam shared a house with his roommates Brett and Jake for most of 2010. The rent was $1200/mo split evenly. On September 1, he moved out to live in his own apartment where he paid $600/mo in rent. At that time, Kyle took Sam's place with his old roommates.

When tax time comes, Sam and his former roommates agree that Jake will claim their rent and reimburse everyone accordingly.

When Sam files, he claims the entire 2010 rent ($14400) and receives a $650 credit. He calculates everyone's share as follows:

Brett: $216.66 (1/3 of $650)
Jake: $216.66
Sam: $162.50 (216.66*9/12)
Kyle: $54.17 (216.66*3/12)

What about Sam's rent at his new place? Since Kyle claimed the rent at his old place, Sam is able to claim 100% of his rent at his new place (the $2400 he paid in 2010 is worth $230) and keep that to himself. Thus he has made the most advantageous use of this credit. Had Sam claimed the rent on behalf of his former roommates instead of Kyle, Sam still would have only received $650 since that's the maximum allowed on a tax return.