One thing we know to be true about every single realtor is that you drive A LOT! Therefore, we need to make sure you are taking advantage of every vehicle deduction available to you.
- Do I need to track mileage?
Absolutely! This is one of the most important things you need to be doing. The amount of your tax deduction each year is based on the total amount of business kms you are driving. Typically, we see 90% or more of your vehicle being used for business purposes. Since we also know your phone is your lifeline, we recommend downloading a mileage tracking app for this. Most of our realtors are using MileIQ. It is simple to use - swipe one way for business and the other way for personal. It will then give you an annual report for deducting your vehicle expenses and provides enough support should CRA want to verify your expenses. - What can I claim?
It is important to keep copies of all your receipts pertaining to your vehicle. Here is a list of the most common expenses we see:
- Fuel
- Insurance
- Repairs
- Oil changes
- Car washes
- License fees
- Tires
- Windshield wiper replacements
- Interior detailing - To lease or to buy?
This is the most common question we are asked, and we have a great answer: It depends! Wasn’t that helpful? We say “it depends” because our answer is determined by your specific situation. First, we always look at what is better from a cash flow perspective. Sometimes there are killer financing deals and sometimes the leasing rates can’t be beat. When buying, you only get CCA (depreciation) on the first $30,000 of the price of the vehicle. When leasing you can only claim a lease payment of $800/month ($900 for vehicles leased in 2022) up to $30,000 in total monthly lease payments for the vehicle. Since realtors drive so much, we find that you often get a new vehicle every two or three years. If this sounds like you, it may be more beneficial to lease.