Karen and Joe, two recent graduates are interested in buying their first property in Nanaimo. They have saved up $30,000 and are looking at buying a property in the $800,000 range and they have been pre-approved for a $750,000 mortgage. They each also plan on using the maximum withdrawal from the RRSP homebuyers plan where Susan has $200,000 in her RRSP and Dave has $70,000. Susan works as a realtor and has a gross income of $150,000 per year and Dave works in construction earning $85,000 gross per year. The property they are buying needs to have rental suite as they want to make sure they can generate some additional rental income to help fund their expenses and retirement goals. They expect to generate $1,500 per month in rental income. They will own the property at joint tenants with rights of survivorship. Dave also needs a new truck for work and he needs help deciding if he should lease or finance the truck to maximize tax savings. He plans on using the truck 100% for work as he has another car for personal use. Please assume a mortgage amortized over 25 years at a variable interest rate of 1.5% compounded semi-annually. For the truck financing rates the bank will offer a seven year loan at 6% annual compounded rate.

Question:

If Susan has a marginal tax rate of 40% and Dave has a marginal tax rate of 30% what are the additional taxes they need to pay as a result of the rental income?