Tax Tips

21 Tax Tips #5 Rental Properties: Current Vs. Capital Expense Claims

With rental properties it's really easy to mistakenly claim all your expenses in a single tax return year, due to misunderstanding the difference between Current vs. Capital expense claims.

Current year expense claims on rental properties would include any expenses associated with getting the rental units ready for rental or maintaining the maintenance of those units as well as improvements to the unit individually in the current year.

If the expense provides a lasting improvement on the property, it would be claimed as a Capital expense, which is deducted from income over a number of years (the total expense is not claimed in the current year).

Mistakenly claiming all your capital expenses in a current year, will likely result in a large unexpected tax bill from the CRA in the future, when they find & correct your tax return.

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