|COLCO: Coalition of Leaky Condo Owners www.myleakycondo.com
P.O. Box 16041, New Westminster, B.C., V3M 6W6
Telephone 604-739-4190 Fax 604-739-4109
----- Original Message -----
From: "Dan ????????"
Sent: Thursday, February 01, 2001 8:07 PM
> Dear David,
> I watch your TV show regularly, it's great!
> I am somewhat familiar with the tax deductibility of repairs on a
rental leaky condo
> against current income, but I wish to learn as much as
> possible about the various scenarios, CCRA rulings, what constitutes
> current income, etc.
> In particular, I recently bought a unit with the full intent of renting
> it out, but prior to that I lived in it for a period so that I could
> facilitate major upgrading and renovations. It was during that
> that it was discovered that the building was a leaky condo.
> intention to rent at the time of purchase provide me with grounds
> deduct repairs?
There is no "for sure" answer to this question but I wil try.
1. Any major upgrading and renovations that
you made before renting
are NEVER deductible against current income.
They are added to the
building cost and are depreciable at 4% per
year but only up to the amount
of profit from the rental income.
2. If an already rented condo "suddenly" needs
because of water damage
the repairs should be deductible and
can be used to create a
loss. This loss which would show up on
line 126 of the tax
return would be deductible against other income
from wages, business, interest,
dividends, royalties, etc.
3. IF and I say IF, the paperwork showed your
intention to rent and
you are only talking a couple
of months between "buying", moving in to
renovate, and then advertising
it for rent when you find out it is leaking, you
could certainly have an argument
that it was and unexpected item and should be a
However, if you bought it and spent a year renovating and "then"
need for leaky rotten condo repairs, it would not be a
repair. Anything more than
90 days for the renovations (in my opinion) is too long a time
purchase and intenet to rent.
I am not the judge, and other circumstances might have slowed
rental plans. I can almost guarantee that you would be
audited and would
likely have to go to court and would have a tough time with 2
but win and
would be unlikely to win in 3 above.
> Also, the renovations are almost finished but the unit may not
> rentable, because no tenants as of yet, wish to rent it given
> will have to go through when the building envelope reconstruction
This extra statement implies more than 90 days already.
I think you are
faced with adding your repairs into the Adjusted Cost Base of
> Can you help me? I have great need for this information
> understandably very low on funds.
You got a free answer. Hope it helps