Accounting questions

[Maddog55]

Okay, all you accounting guru's:

Feel free to give me your professional advice, BrknFngrs.

question:

I have two houses. The one in questions belongs to a family member as his principle residence, I am co-owner.
I've put roughly $40 k into the house in renovations. Although my company is in a SIMILAR line of work, these renovations were not part of my regular income work, hence I can't claim these expenses/materials.

The house will be sold as his principle residence (to avoid the cap gains tax) But I'd like to somehow be able to use these expenditures as a write off.

SO...can I set up a secondary business (ie ABC renovations) and write off the expenses? Even though I won't get paid for this job...can I "invoice" my family member for the work done, wether or not it gets paid, ie: eventually written off as a bad debt? Or can I do it under my current business with the same scenario?

[whodiman]

One thing you need to clarify is how you are a co-owner. Is your name on the title along with the other family member?

[icecreamvan]

Is there a way to get discounted price for one HID?

Yes there is!

Legal? :dunno:

[whodiman]

also here is your risk of setting up a 2nd business (abc) and writing it off. If that is the ONLY revenue and then it is written off to show a big loss probably you stand a pretty good chance of an audit.

[BrknFngrs]

Taken to PM

[Chandler_Racing]

I'll be the first to admit that Tax is one of my weaknesses, but...

Subsection 78(4): Unpaid Remuneration and Other Amounts. Salaries, wages, and other remuneration must be paid within 179 days of the taxation year end. If an amount is unpaid after that day it will be deemed not to have incurred as an expense; therefore, not deductable until paid.



SO...can I set up a secondary business (ie ABC renovations) and write off the expenses? Even though I won't get paid for this job.

[Maddog55]

Originally posted by whodiman
One thing you need to clarify is how you are a co-owner. Is your name on the title along with the other family member?

yes, on title



Originally posted by Chandler_Racing
I'll be the first to admit that Tax is one of my weaknesses, but...

Subsection 78(4): Unpaid Remuneration and Other Amounts. Salaries, wages, and other remuneration must be paid within 179 days of the taxation year end. If an amount is unpaid after that day it will be deemed not to have incurred as an expense; therefore, not deductable until paid.



Ahh...interesting, good find.

I've left everything in the hands of my accountant. These are scenarios that I was mulling around in my own head, so I'm interested what she does with it. stay tuned

[UndrgroundRider]

Originally posted by Maddog55
[B]

yes, on title



You have to pay capital gains tax on the portion of the house that you own. I know that wasn't the question, but it seems to be something you're not aware of.

[icecreamvan]

I would looove the name of the crooked accountant who would let you write off debts to yourself as bad debt. :rofl: