Real Estate

# Mortgage Interest Calculation on Rental Property

• Last Updated:
• Feb 26th, 2023 8:54 pm
SCORE
[OP]
Newbie
May 25, 2020
54 posts
Ottawa

## Mortgage Interest Calculation on Rental Property

I am pretty confident I have this right but I was hoping to see if anyone else has been in a similar situation and could share their experience.

The mortgage on my rental property is in a fixed payment variable rate term with TD. With the recent rate hikes, I am currently accruing about \$200 more interest per month than my payment. I got TD to send me a statement of interest paid (I hold onto these for the CRA), but they are stating interest paid, not interest accrued.

My question is, I think I should be reporting the interest accrued to the CRA, not the interest paid, right? I think what is happening is the bank is charging me \$2000 in interest, I pay \$1800 cash, and then I am effectively reborrowing the other \$200 to pay the rest. So if I think of it as my rental business being invoiced for \$2000, and then paying that with some cash and some borrowed money, then I think the correct amount to claim to the CRA would be \$2000.

Does that logic make sense? Has anyone else dealt with this before, and more specifically, does anyone know of a more detailed statement I can request from TD to give me the interest accrued rather than interest paid? Or am I stuck making my own spreadsheet calculating loan balances every time I make a payment or there is a rate change?

Thanks for any input
4 replies
Sr. Member
Apr 23, 2014
947 posts
Toronto, ON
Sorry to hijack this thread but interesting question.

I've variable rate that increases as interest rate changes. My term remains 25 years. But just higher payments.

I think in OP case, the term increases since payments don't increase, where high interest starts to eat into principal?

I guess in my case, I just report whatever interest I've paid? Since it is "open variable"?

Rental property as well.
Deal Guru
Feb 22, 2011
13757 posts
Toronto
vanclty wrote: Sorry to hijack this thread but interesting question.

I've variable rate that increases as interest rate changes. My term remains 25 years. But just higher payments.

I think in OP case, the term increases since payments don't increase, where high interest starts to eat into principal?

I guess in my case, I just report whatever interest I've paid? Since it is "open variable"?

Rental property as well.
OPs term will display as higher for now but at renewal his payment will go up forcing it back down. Though he could refinance and extend it he wants.

Your interest paid will be the same as the interest expense so you just declare that.