Real Estate

Car lease expense on property rental

  • Last Updated:
  • May 2nd, 2019 10:31 am
[OP]
Jr. Member
Dec 8, 2008
109 posts
1 upvote

Car lease expense on property rental

I wonder how many rental property you need in order to claim for car lease expense?
12 replies
Member
Feb 15, 2018
329 posts
397 upvotes
It does not work that way. In order to claim vehicle expenses as a business owner you have to prove that you are using the vehicle for business. It is not determined by how many rental properties you own. For example if you have to go to RONA to pick up a new vanity for your rental property, just that use of your vehicle can be expensed as it is directly related to the business.

Also the accounting could be quite a nightmare once you try to claim lease payments as you will have to add personal mileage to your personal income as a taxable benefit e.t.c
In your case the simplest method would be to just record the kilometres you use for conducting your rental business and just claim mileage from the CRA at the end of the year. A lot simpler as with this method you do not have to account for car payments, fuel, maintenance, insurance e.t.c. Very straightforward as the government has a simple formula where you just multiply kilometres driven for business by the standard mileage allowance ($0.55).
Sr. Member
Mar 25, 2002
609 posts
73 upvotes
canuckstorm wrote: It does not work that way. In order to claim vehicle expenses as a business owner you have to prove that you are using the vehicle for business. It is not determined by how many rental properties you own. For example if you have to go to RONA to pick up a new vanity for your rental property, just that use of your vehicle can be expensed as it is directly related to the business.
I know you said its not determined by how many properties you own, but some types of trips ARE determined by the # of properties. If you own 1 property you cannot claim the mileage for collecting rent, however if you own two properties or more you can.
Newbie
Apr 30, 2019
39 posts
26 upvotes
Good to know! This is why I signed up to this site. :) Do you have a link to this by any chance?
zeroburn wrote: I know you said its not determined by how many properties you own, but some types of trips ARE determined by the # of properties. If you own 1 property you cannot claim the mileage for collecting rent, however if you own two properties or more you can.
Deal Fanatic
User avatar
Jun 26, 2005
9984 posts
1869 upvotes
Toronto
Learned something new today. $0.55

I've been claiming the gas cost using km travelled and the gas price on that day, with my cars avg consumption rate. Figured that's truly accurate so CRA should be happy if I'm audited one day.

Like the other poster said, it still ended up as peanuts!! Haha useless.
Deal Guru
User avatar
Mar 23, 2008
11905 posts
8154 upvotes
Edmonton
rfdrfd wrote: Learned something new today. $0.55

I've been claiming the gas cost using km travelled and the gas price on that day, with my cars avg consumption rate. Figured that's truly accurate so CRA should be happy if I'm audited one day.

Like the other poster said, it still ended up as peanuts!! Haha useless.
The $0.55/km also is intended to take into account depreciation on the car for the extra mileage, maintenance, etc. So you could likely have claimed more than peanuts. :)

C
Member
Feb 15, 2018
329 posts
397 upvotes
zeroburn wrote: I know you said its not determined by how many properties you own, but some types of trips ARE determined by the # of properties. If you own 1 property you cannot claim the mileage for collecting rent, however if you own two properties or more you can.
Pardon me, I am not a CPA but just a business man who also claims mileage and deal regularly with CPA's when doing my business taxes.

I am failing to understand what you mean. Are you saying that the CRA makes a distinction on claiming vehicle expenses for people in the rental property business by virtue of whether they own a single or multiple properties? Doesnt make sense to me. So, in other words someone who owns a 10 unit apartment building (considered a single property) can not claim the mileage for collecting rent, yet someone who owns two separate detached houses can?

I always thought that as long as you are generating taxable business income, you can claim all legitimate and reasonable expenses. Whether claiming those expenses is worth it is a whole different discussion. I stand corrected if there are any tax bulletins or case law making a distinction between single and multiple property owners.
Deal Expert
User avatar
Jun 12, 2007
16035 posts
4868 upvotes
London
canuckstorm wrote: Pardon me, I am not a CPA but just a business man who also claims mileage and deal regularly with CPA's when doing my business taxes.

I am failing to understand what you mean. Are you saying that the CRA makes a distinction on claiming vehicle expenses for people in the rental property business by virtue of whether they own a single or multiple properties?...
https://www.canada.ca/en/revenue-agency ... enses.html

You can deduct motor vehicle expenses in the following circumstances:

If you own one rental property – You can deduct reasonable motor vehicle expenses if you meet all the following conditions:
  • you receive income from only one rental property that is in the general area where you live
  • you personally do part, or all, of the necessary repairs and maintenance on the property
  • you have motor vehicle expenses to transport tools and materials to the rental property

You cannot deduct motor vehicle expenses you incur to collect rents. These are personal expenses.

If you own two or more rental properties – In addition to the expenses listed above, you can deduct reasonable motor vehicle expenses you incur to do any of the following:
  • collect rents
  • supervise repairs
  • manage the properties

This applies whether your rental properties are located in or outside the general area where you live. Your rental properties have to be located in at least two different sites, away from your principal residence.
Last edited by l69norm on May 2nd, 2019 8:55 am, edited 1 time in total.
Member
Feb 15, 2018
329 posts
397 upvotes
Anyway, what is the real jist of the OP's question? Are they trying to find out that just by virtue of being a rental property owner they can lease that new Mercedes E-Class and expense the lease payments. There is this general misconception from the public that if you own a business that you can write off your entire lease payments as a business expense. It is also fueled by the car sales industry which pushes as one of the major advantages of leasing, being the ability to write off the payments as business expense.

It doesn't quite work that way as the devil is always in the detail:
1) For it to be economically feasible, you have to be in a business where you do a lot of driving for business purposes. Owning a store and driving from home to the shop does not count as this is considered commuting. You typically have to be driving from your designated base of business for it to be considered business travel. Not too many businesses land themselves to this type of travel and the landlord business is one of those that does not generally involve lots of traveling. On the other hand being a realtor or plumber can easily result in lots of travel, as you are always out of your office. For a landlord you could only end up getting like $250 for the whole year for you travel. Besides, how many land lords still go pick up rent cheques. Thought they now do either electronic deposits or post dated cheques. Maybe fellow landlords can educate us.
2) There is also a limit to the value of the vehicle you can lease.
Last edited by canuckstorm on May 1st, 2019 9:34 pm, edited 1 time in total.
Member
Feb 15, 2018
329 posts
397 upvotes
l69norm wrote: https://www.canada.ca/en/revenue-agency ... enses.html

You can deduct motor vehicle expenses in the following circumstances:

If you own one rental property – You can deduct reasonable motor vehicle expenses if you meet all the following conditions:
  • you receive income from only one rental property that is in the general area where you live
  • you personally do part, or all, of the necessary repairs and maintenance on the property
  • you have motor vehicle expenses to transport tools and materials to the rental property

You cannot deduct motor vehicle expenses you incur to collect rents. These are personal expenses.

If you own two or more rental properties – In addition to the expenses listed above, you can deduct reasonable motor vehicle expenses you incur to do any of the following:
  • collect rents
  • supervise repairs
  • manage the properties

This applies whether your rental properties are located in or outside the general area where you live. Your rental properties have to be located in at least two different sites, away from your principal residence.
Thanks for the clarification. Learn a new thing everyday.
Deal Addict
Feb 5, 2009
2808 posts
928 upvotes
Newmarket
canuckstorm wrote: It does not work that way. In order to claim vehicle expenses as a business owner you have to prove that you are using the vehicle for business. It is not determined by how many rental properties you own. For example if you have to go to RONA to pick up a new vanity for your rental property, just that use of your vehicle can be expensed as it is directly related to the business.

Also the accounting could be quite a nightmare once you try to claim lease payments as you will have to add personal mileage to your personal income as a taxable benefit e.t.c
OP never mentioned that he is a business owner, he is simply asking about auto expenses on for his rental property. Unless he provides more info, quiet likely scenario is that his rental properties are owned by him personally.
In order to have issue with taxable about benefits, the car would need to be owned by his corporation and used personally.
Renting properties is not the same as running a business.
Sr. Member
Mar 25, 2002
609 posts
73 upvotes
canuckstorm wrote: Pardon me, I am not a CPA but just a business man who also claims mileage and deal regularly with CPA's when doing my business taxes.

I am failing to understand what you mean. Are you saying that the CRA makes a distinction on claiming vehicle expenses for people in the rental property business by virtue of whether they own a single or multiple properties? Doesnt make sense to me. So, in other words someone who owns a 10 unit apartment building (considered a single property) can not claim the mileage for collecting rent, yet someone who owns two separate detached houses can?

I always thought that as long as you are generating taxable business income, you can claim all legitimate and reasonable expenses. Whether claiming those expenses is worth it is a whole different discussion. I stand corrected if there are any tax bulletins or case law making a distinction between single and multiple property owners.
By the way, I am a CPA, and a property owner.

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