How to claim new flooring expenses on a rental.

[tnasante]

Do you need to take the total costs of the flooring and depreciate it over 27.5 years and only claim that portion each year.  How does that work when we will likely need to redo the flooring in 5+ years.  At what point do you get to claim the difference - say in 5 years you need to redo the flooring but you've only written off $1000 from the first time over the last 5 years.  Does that come into play if you sell the place - do you then write off all the things you've depreciated over the years you've owned it.  Thanks

[TurboTaxSusan]

The 27.5 year thing is only for US taxes. Here in Canada we have a different system.

There are two types of expenses - capital expense & current expense. In short, a capital expense is something that will add value to a building. Renovations that are done before renting generally fall under this category. A current expense is one that is done for repairs or maintenance – basically to bring the building back to original condition. This CRA link goes into more detail: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/current-expense...

If the new floor that you installed is the same as or similar to what was originally there, this would be a current expense, and you would just claim the whole amount in one year.

If the new floor is substantially nicer than the old flooring you might be able to consider it a capital expense. In that case you would either add it to the CCA class of your building or put it in Class 8 (misc items).

However, since this is a somewhat controversial topic, it would be a good idea to consult with the CRA or someone with expert knowledge in this area. https://turbotax.community.intuit.ca/replies/2647704