- *Home Office. Calculate the portion of your home that you use for self-employed income, then deduct that percentage of rent or mortgage payments, utilities, home insurance, property tax and home maintenance.
- *Business Entertainment. Deduct 50% of the cost of meals or events that involve business discussions.
- *Communications. Calculate the portion of phone, cellphone and Internet that are for business, then deduct that percentage of monthly bills.
- *Transportation. Keep track of how much of your vehicle's mileage relates to business, then deduct that percentage of costs for gas, maintenance, insurance, etc.
- *Subscriptions. Deduct the cost of magazines, newspapers, websites and cable channels related to your business.
- *Travel. Deduct business travel costs such as airfare, subway tickets, hotels and en route meals.
- *Continuing Education. Deduct the cost of courses that make you more effective in your business.
Wednesday, 28 August 2013
Tax Advantages of being Self-Employed
If you're looking for a way to accelerate your savings so you can achieve financial independence more quickly, consider self-employment. The safest way to start is by earning self-employed income on the side while keeping your current full-time job. But regardless of whether you're self-employed part-time or full-time, you can benefit from many tax-deductible business expenses:
How recent CMHC changes affect Canadians
Over the past few years, the Canadian government has been taking several steps to encourage Canadians to reduce their outstanding debt. The main way the government's been doing this is by restricting mortgage availability and making mortgages more expensive. In August, CMHC announced a new policy which reflects the government's goal to reduce household debt. Unfortunately, this latest change may cause mortgage rates to rise yet again. Here's how this change came about. Earlier this year, Ottawa announced it was limiting the amount of mortgage-backed securities it would guarantee in 2013 to $85 billion. Mortgage-backed securities are pools of mortgages that lenders sell to investors. Since mortgage-backed securities are insured by CMHC, investors are willing to accept a lower rate of return, and lenders can pass on this lower rate to consumers in the form of lower mortgage rates. Canadians are so hungry for low mortgage rates, by the end of July lenders had already used up $66 billion of the $85 billion annual limit on mortgage-backed securities. This means lenders have to get through the rest of the year on a much reduced volume of low-cost lending funds. To make sure the remaining funds are shared equitably, CMHC is limiting each lender to $350 million worth of mortgage-backed securities per month. This means lenders suddenly have far less low-cost mortgage funds available to pass on to consumers. The good news for Canadians is that taxpayers are guaranteeing fewer mortgages and therefore exposed to less risk. But the bad news for homebuyers and people refinancing their mortgages is that longer-term mortgage rates are likely to start creeping up. If you're in the market for a mortgage or refinancing, give me a call. As a mortgage broker, I have access to lenders who are less likely to be affected by this latest change (such as credit unions), and I can provide you with professional advice to help make sure you and your family enjoy the most affordable financing possible. Kupina Mortgage Team | www.kupinamortgage.com
Friday, 2 August 2013
Psycho-Cybernetics: How your Subconscious "Set Point" Determines your Financial Future
Psycho-Cybernetics is a way to define our self-concept so we can attain personal goals. Many of the training methods used for elite athletes are based on this proven concept—and it can also help us reach financial goals. Each of us has a blueprint or "set point" that guides our experience. Studies show that regardless of how much they win, lottery winners usually return to their original financial circumstances. Similarly, self-made millionaires who lose their money usually earn it back quickly. In both cases, they're simply returning to their natural set point. So how do we change our set point? By changing our attitude! To achieve a positive outer goal we have to set a positive inner goal. Lack of money isn't the problem—it's a symptom of underlying attitude. To change that attitude, start by visualizing and really FEELING what it's like to be a millionaire, who your friends would be, what you'd do each day. Then move on to affirmations that declare your intention and send a powerful message to your subconscious. Here's an example, "I release my non-supportive money experiences from the past and create a new and rich future." For best results repeat out loud morning and night in front of a mirror. Gradually, you'll begin to shift your set point and start to achieve your goals faster and easier than ever before! Kupina Mortgage Team | www.kupinamortgage.com
Stricter Debt Ratio Standards on the Way
When CMHC tightened mortgage rules last year, among the changes were stricter debt ratios and income confirmations. For typical borrowers, these are key factors in determining whether or not you'll get a mortgage. If you're close to the line on debt and income, last year's changes have made it more difficult for you to qualify. And unfortunately, things are about to get even more difficult! On June 27, 2013, CMHC issued new guidelines for calculating debt ratios and confirming income documents. While most lenders have already been following these rules, CMHC is now closing the "loopholes" that allowed some lenders to offer easier approval for borrowers with tight debt ratios. Here are some of the rules that have been clarified:
- *If you have variable income from things like bonuses, tips and investment income, lenders must use an amount not exceeding the average income of the past two years.
- *If you own other non-owner-occupied rental properties, the principal, interest, property taxes and heat on those properties must be deducted from gross rent revenue or included in "other debt obligations" when Total Debt Service ratio is calculated.
- *For unsecured credit lines and credit cards, no less than 3% of the outstanding balance must be included in monthly debt payments.
- *For secured lines of credit, lenders must factor in "the equivalent" of a payment that's based on "the outstanding balance amortized over 25 years."
- *For heating costs, lenders must obtain the actual heating cost records of a property or use a set heating cost formula. This can double or triple the cost factored into debt ratios on larger properties, and reduce it on smaller ones.
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