Interest expenses related to funds borrowed for down payment at a townhouse

[maggiely2022]

Hi,

I signed a purchase agreement to buy a townhouse that will be closed in 2023. However, in order to pay the down payment, I borrowed the funds from friends, and I agreed to pay interest on an annual basis. The townhouse is an investment property that I intend to rent it out after closing. May I ask can I claim interest expenses in 2021 although the townhouse will be closed in 2023?

[_krups_2938]

Yes, you can claim interest expense for the rental property which is just for investment. As you mentioned in your question you have signed the official contract with your friends. According to this page regarding Interest and bank charges related to the rental property of the Canada Revenue Agency, you can deduct the interest charged on the money you borrow to buy or improve your rental property.

For more information on rental expenses visit this link from Canada Revenue Agency: - Rental expenses you can deduct

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