Claiming home improvement with rental expenses

[Alex709]

I rent out my basement apartment with utilities included. It is my principle residence, and I live upstairs. The apartment is 50% of the square footage of my home, therefore I am claiming 50% of certain expenses (mortgage interest, utilities, property tax, home insurance) as rental expenses.

I added approximately $1000 worth of insulation in the attic of the home to reduce heat loss, and I replaced the hot water tank (that both units avail of). Can I claim a portion of either of these as a rental expenses?  Thanks to anyone who can help.

[ram06 · Accepted solution]

In order to claim rental expenses, the expenditures should be current rather than capital. An expense that simply restores a property to its original condition is usually a current expense. For example, the cost of repairing wooden steps is a current expense. Conversely, the cost of a repair that improves a property beyond its original condition is probably a capital expense. You need to analyze whether the new hot water tank is better than the old one and is considered an improvement. 

Please read this article to precisely assess your expenses 

Current expenses or capital expenses as per the Canada Revenue Agency (CRA)

Related Information:

Rental Property Expenses as per TurboTax

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