Home reno deductions
Hi David,
I am installing a legal basement suite in my home for rental
purposes and was wondering if I can deduct renovation costs from
my income tax. There is quite a significant investment being made
and I would love to recover some cost. Also if I can do this, do
I need to file for costs in the year they were incurred or can I
do it all on my 2006 return. I have already filed for 2005 but
some of the reno's were done last year.
I'm sure with the amount of secondary suites in Vancouver these
days, there are other folks wondering the same thing
..
Thanks for all your help!
============================
david ingram replies:
Sorry, no deduction. Renovations or building the suite are a
capital item with a long shelf life and must be depreciated to
recover any costs. On the other hand, since it is a suite in
your house, you do NOT want to claim Capital Cost allowance
(depreciation or CCA) on the suite or the house because the CRA
says that claiming CCA means you have to pay capital gains tax on
that proportion of any profit on sale.
But keep track of any expenses. If push comes to shove and the
CRA was successful in taxing part of the house, claiming CCA on
the renos would be claimab le (deductible) at that time.
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