Thank you for your question.
As long as your rental income for the year is greater than your expenses, you can include the "soft costs" as current expenses. You would use the Feb. 15th date, for start of rental.
FROM CRA
Construction soft costs
You may have certain costs relating to the period you were constructing, renovating, or altering your rental building to make it more suitable to rent. These expenses are sometimes called soft costs. They include:
- interest;
- legal fees;
- accounting fees; and
- property taxes.
Soft costs for the period of construction, renovation, or alteration of a building are made up of the soft costs related to the building and ownership of the related land. The building's related land consists of the land:
- that is under the building; or
- that is just beside the land under the building; used or intended for use for a parking area, driveway, yard, garden, or any other similar use; and necessary for the use or intended use of the building.
Depending on your situation, soft costs may be deductible as a current expense or added to the cost of the building.
Soft costs related to the building may be deductible as a current expense if they relate to:
- only the construction, renovation, or alteration of the building; and
- the time period it took place in.
We consider the period of construction, renovation, or alteration to be completed on whichever date is earlier:
- the date the work is completed; or
- the date you rent 90% or more of the building.
When these conditions are met, the amount of soft costs related to the building that you can deduct is limited to the amount of rental income earned from the building.
Soft costs that do not meet the above conditions can be added to the capital cost of the building and not the land.
CCA, landscaping costs, and disability-related modifications to the buildings' costs are not subject to the soft-cost rules.
http://www.cra-arc.gc.ca/E/pub/tg/t4036/t4036-e.html#P326_29885
Sign In
Canada (English)
EN
