Banking

[MikeMcC874]

Newbie question:



Should I keep separate bank accounts for each property (when I get my second one ) even if I am the only owner? I could see this if you have JV's on properties.



The follow-on question would be around the accounting. When you file, I know there is a separate for for real estate. But is it one form per property or does it contain an aggregate for all your properties?



I have more questions around this stuff but I will wait and see if the answers to these help clarify the process.



Thanks

Mike

 

[Thomas Beyer]

I would separate private from business transactions, both credit cards and bank accounts.



Therefore, ALL transaction on a CC or bank account are business related, and thus easier to track for you or accountant. You do not have to do this, and there is slight add'l cost, but I find it worth my while.



Once you have JVs, one bank account per JV, and invoices for each JV. So if you have 2 properties in a remote city, one owned personally and one owned with a partner, I'd invoice 50% of that trip to each party, as an example.

 

[MikeMcC874]

Sorry, ya, I get the separating the personal and business accounts stuff. I am actually pretty up tight about it.



Do you separate each properties account if it is wholly owned? Do we have to do taxes separately per property or is it all lumped together?



Thanks again Thomas.

 

[jarrettvaughan]

I like to have a separate account for each property, even if they are owned by the same investor. The 2 properties that I own alone, I have separate accounts for.



The reason is, I can log onto my online banking and quickly scan each account and with in a couple minutes, I know how each property is performing. If I had an account with a couple properties, I would not know how each individual property is performing at that moment.



The downfalls can be related to cashflow. This may result in having a small amount of money in numerous accounts, rather than larger sums in one account. Depending on your cashflow situation, when your property manager pays you for the rent and when your expenses are withdrawn, you may have to supplement your cash if your reserves are low.

 

[Thomas Beyer]

[quote user=MikeMcC874]is it all lumped together?


Assuming you own them personally (and not via a corporation) you file one income tax return and have one schedule per property. On these schedules you list the various expenses, PER PROPERTY, be it travel expenses, utilities, interest, property taxes, ..



This form is T776 .. and there is a lot of info on CRA's website here:



http://www.cra-arc.gc.ca/E/pbg/tf/t776/t776-10e.pdf and accompanying commentary here:



http://www.cra-arc.gc.ca/E/pub/tg/t4036/t4036-e.html