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Federal Rental Income Tax Formula:
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In British Columbia, rental income is subject to federal income tax. The tax is calculated on your net rental income (gross rent minus deductible expenses) at your applicable federal tax rate.
The calculator uses the following formula:
Where:
Explanation: The calculator first determines your taxable rental income by subtracting deductible expenses from gross rental income, then applies your federal tax rate to calculate the tax owed.
Details: Accurate rental income tax calculation is crucial for proper tax filing, avoiding penalties, and financial planning for property investments in British Columbia.
Tips: Enter your total rental income and deductible expenses in CAD, then input your applicable federal tax rate as a percentage (e.g., 26 for 26%). All values must be non-negative.
Q1: What expenses are deductible for rental properties?
A: Common deductible expenses include mortgage interest (not principal), property taxes, insurance, maintenance, utilities, property management fees, and depreciation (CCA).
Q2: How do I know my federal tax rate?
A: Your federal tax rate depends on your total taxable income. For 2023, rates range from 15% to 33%. Check CRA's tax brackets for current rates.
Q3: Is this calculator for personal or corporate rental income?
A: This calculator is designed for personal rental income. Corporate rental income taxation is different.
Q4: Does this include BC provincial tax?
A: No, this calculator only estimates federal tax. BC provincial tax would be additional.
Q5: Should I use this for official tax filing?
A: This is for estimation only. Always consult a tax professional or use CRA-approved software for official tax filing.