Income Suites 101 – Part 4
More About the Numbers
There’s more to the numbers than just assessing the cost of a renovation. These other numbers should figure into your financial considerations.
- Your property tax may be raised slightly to reflect your home’s increased value after you’ve put in the income suite.
- The income that the suite generates is not only considered income by the banks, but also by the government. The additional income tax you may have to pay, however, can be offset by deductions for the operating costs of the unit (a portion of your utility costs, property tax, maintenance and repairs costs, and so on).
- If you are building or renovating an income suite in a property that is not your home, you may be able to write off these costs against future capital gains. Always check with your accountant about what expenses can be claimed and what revenues need to be reported.
- Your home insurance costs may rise to cover the change in your home’s value and the fact that you have additional people living on the property, but usually, this is not a significant increase. You can, however, add a rider that will protect you against loss of rental income if something like a flood should make the unit unfit for renting for a time. But you will pay a premium for this.
- Your homeowner’s insurance cannot cover your tenants’ possessions. You need to let your tenants know that they need their own insurance.
- If you don’t have the utilities on separate meters, you will likely see an increase in your gas, electrical and water bills.
It’s a lot to think about, but don’t let the numbers scare you. As long as you can factor in all the numbers and come up with a positive cash flow number you’ll be in good shape.
Next Article: Part 5 – Assessing the Potential
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