Home Buying, Selling, and Property Investment Blog
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- Written by Sherilynn Milsom
A: Any refundable portion of option money may be classified as a current liability - we call it "option reserve" in QuickBooks. As for the non-refundable portion, which the seller keeps regardless of whether the sale to the tenant is successful, the more conservative approach is to account for this as income when received. When received, we don't know if the income will eventually be earned as sale proceeds or forfeited as liquidated damages, hence the argument for counting it as a current liability rather than income. However, there is a clause in a CRA bulletin which may be interpreted to mean the money should be classed as income when received regardless of the fact you have not yet "earned" it. If you are audited and the auditor latches on to this particular clause, you will have no defense.
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- Written by Sherilynn Milsom
A: The reason it matters storage rentals are governed by contract law rather than the RTA is there are certain terms outlined in the RTA governing all leases whether or not they are stipulated in the lease. In a storage contract, all points must be addressed in the contract as there is no all-encompassing governing Act.
The handling of abandoned goods and the restrictions on security deposits are two relevant examples. There are very strict rules for residential tenancies, but for storage agreements you may write your own rules in to your contract.
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- Written by Sherilynn Milsom
A: In Alberta, a fixed-term tenancy is any tenancy with a stated end date. It can be a year, or a few weeks, or whatever else is agreed. At the end of the lease, neither party is required to give notice to end the tenancy. Although no notice is required, it is a generally expected courtesy the landlord and tenant will provide some notice of non-renewal.
I start all of my tenants with a 3-month trial lease "to be sure everyone is happy." It is for the tenant's benefit to ensure he likes the neighbourhood and neighbours (especially useful in up/down duplexes); it is for the other tenants' benefit (especially if they have been excellent tenants for years and I want to ensure their continued satisfaction); and it is for my benefit because I can choose to not renew the lease if things aren't working out the way they should.
As with periodic (month-to-month) tenancies, rent increases are allowed only after a minimum of 365 days since the last increase or since the start of tenancy. The differences in the case of fixed-term are: a) increases may not occur during the term of the fixed-term lease, and b) no notice is required to increase rent for the start of the new lease term.
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- Written by Sherilynn Milsom
Q: I am currently helping a few clients managing their properties (receiving rents from their tenants, remitting rents back to landlord with a small management fee). I plan to incorporate this as a business. Is it possible at all? I read that rental income is treated as passive income, but I am the property manager for my clients, collecting rents for my clients and remitting rents to them. How should I classify this income to be?
A: In Alberta, you cannot act as a property manager unless you are licensed or have a vested interest (an ownership interest) in the property.PM income would be active income, but you should not perform this service unless you meet the qualifications and follow the laws of your province. There are pretty stiff penalties if you don't.
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- Written by Sherilynn Milsom
We are pleased to announce a new addition to the QDHomeQuest team: Sarah Torfason is our new Operations Manager.
Sarah has an extensive background in real estate sales, construction coordination, marketing, and customer service.
We anticipate she will be a valuable resource to both our company and our clients, and we are excited to welcome her!