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Whether to write off the cost of renovations annually, or upon the sale of the property, depends on how you plan to use it. Do you intend to hold it as a source of income, or sell it in short order to take advantage of rising real estate values?
Market Value of the property on the date of death minus Adjusted Cost Base (ACB) of the property
The ACB is the original cost of the property, plus upgrades, less CCA taken. If you plan to hold the property for only a short time to take advantage of rising market values, then you would likely want to minimize the taxes on your capital gain and so you would not take the CCA. Finally, taking CCA or not can be decided on a year-by-year basis as it is a discretionary deduction. In all cases, you will benefit by discussing your short- and long-term plans for the property with your tax accountant. Theresa Morley, CAP, CA, is a partner with Morley Chartered Accountants in Barrie, Ont. Check out her blog.Share this article Share on Facebook Share on Twitter Share on Linkedin Share on Reddit Share on Email
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We have been renting out our property for almost 10 years. The tenants have left and we have decided to move back in. Before we move back in, the place needs some repairs and minor improvements (painting, new kitchen countertop) due to the usual wear and tear. Can I claim these expenses as deductions from this year’s rental income? Or is it too late now that the tenants have moved out?
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We have been renting out our property for almost 10 years. The tenants have left and we have decided to move back in. Before we move back in, the place needs some repairs and minor improvements (painting, new kitchen countertop) due to the usual wear and tear. Can I claim these expenses as deductions from this year’s rental income? Or is it too late now that the tenants have moved out?
Due to the large volume of comments we receive, we regret that we are unable to respond directly to each one. We invite you to email your question to [email protected], where it will be considered for a future response by one of our expert columnists. For personal advice, we suggest consulting with your financial institution or a qualified advisor.