Hello:
We have recently renovated our basement (legal secondary unit/apartment), and the constructions work completed this year (2024). We couldn't rent out the place yet, so there is no rental income for 2024.
Since we spent a significant amount of money this year, we are wondering how to reduce our tax bill for FY 2024. Can we show some portion of renovation cost as rental expense against '0' rental income? OR we have to show full renovation cost as capital expense (for instance: $50K) and then depreciate ($5K) over the next 5-7 years. In this case, we have to pay capital gain tax when selling our home/principle residence, if so when which amount we have to pay that tax? Can someone please provide some insights on this? Thanks!
Expenses that provide lasting benefits are considered “capital.” Those are the renovations and repairs that will be around for your tenants to enjoy for years to come. Some common capital expenses you might claim on your rental property include a new roof, vinyl siding, and new windows.
As your question is more taxes related, we suggest you to contact CRA to verify what is the best in your situation. Also, here here is a link explaining what can be claimed as a rental expense.
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Not helpful. Sorry. I thought it would be more specific.
We would suggest that you contact the Canada Revenue Agency at 1 (800) 959-8281 so that they can give you specific clarification on what you would like.
Here is a good read that might clarify: TurboTax Landlords ToolBox
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