You can only claim expenses that you incurred to earn rental income – no personal expenses. If an expense is both personal and business-related, you can only claim the portion of the expense that relates to your rental. For example, if you want to claim utilities, you can only claim the amount that you spent when the cottage was rented out.
There are two kinds of expenses – capital and current. A current expense is an amount you spend to upkeep your property, like maintenance. Generally, you can claim current expenses in the year that you incurred them. The refinishing of your siding is likely a current expense.
A capital expense is something that improves your property. Depending on the cost, you may want to take capital cost allowance (CCA) for these expenses. This allows you to deduct a portion of the expense over several years. You may be able to take CCA on your water filtration system if you didn’t have one previously, and the cost was substantial.
Please see these Canada Revenue Agency (CRA) pages for more information on expenses:
Current expenses or capital expenses
Capital cost allowance (CCA) for rental property
