Renovating a Rental Property – When Expenses Are Deductible

by Tax Guy - Burlington Accountant on April 1, 2009 Print This Post Print This Post

Question: I recently moved out of my old residence and have purchased another property. I am presently fixing up my old residence to rent it out. I am wondering if I am able to deduct the interest portion of the mortgage on the property if it is un-occupied for the few months it takes to get everything fixed up for rental. Thanks

In order to claim deductions you need to have a business or property that is ready and available to earn income.  Once the property is ready and available for use, any expenses you incur may then be deducted from your taxable income.

In the period before the property is ready to use, you may be able to add the interest as well as the costs to improve or fix the property to the total cost of the property.  This will increase the amount of tax depreciation, known as capital cost allowance or CCA, you can claim when the property is rented.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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