Capitalize On Your Rental Property With Home Renovations
In relation to claiming a tax deduction on the house in which you live, in most cases my answer is “no” unless you are a sole proprietor and you work from home. In this case you are able to claim the cost of renovating your home office (and only this portion of your home) as a tax deduction.
However, there are many deductions that you can claim if you own a rental property. Some which subsequently allow you to receive a write off for any home renovations you complete.
The following is a list of write-off’s you can claim against your rental property income:
- Advertising expense – You can write-off any costs associated with advertising that your property is for rent.
- Interest expense – Any interest accrued on the mortgage for your rental property is tax deductible.
- Office expense – You can claim any administration costs associated with renting out your property.
- Legal/accounting – You can claim any legal or accounting fees that are associated with the property.
- Management fees/Strata – Fee’s that are associated with owning a condo.
- Repairs and Maintenance – Any costs associated with fixing issues with, and maintaining your property.
- Capital Improvements – This is the category that any renovations would fall under. If you renovate your rental property you can claim the expense over a number of years.
- Salaries – for a property manager
- Property Tax
- Travel – if your property is out of town you can claim the cost of travelling from your place of residence to the rental.
Please be aware that rental properties are considered a business, and will therefore be charged at the Business Tax Return rate.
If you budget correctly renovating your rental property can be a wise decision, it can increase the value of the property and the value of your rent as well as provide you with some great tax deductions.
Teya Mali is the lady in charge at Homeroom Small Business Solutions Inc., a company built to be exactly what you’d expect from cool chicks doing books. They are meticulous, organized, detail-oriented and accurate. Homeroom’s mission is to serve the needs of small business owners by streamlining their businesses, bringing clarity to their financial records and by providing them with the tools they need to ensure a prosperous future.Back to the Blog