Posted on: 15-11-11 12:28:13
Hi There,
I hope someone can help me understand and clarify things for me. I have a Condo which is currently rented out. The condo board has recently requested every owner to pay special assessment of $8000 in two years time period. First Installment is due this year prior to December for about $5000.
Can anyone please help me understand if this cost can be counted as business expense or capital loss?
If this is a business expense, then my understanding is that I should be able to deduct it from the rental income.
If it is not a business expense, I am not sure how to take any tax reduction on my loss?
Many thanks for your help in advance.
Jignesh
What exactly is this amount for?
If it is property taxes recovery based on a re-assessment, then it's a regular expense and can be deducted against rental income.
If it is based on some property improvement, you can add it to your ACB.
It doesn't sound like a rental loss, though.
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Hi Patrick,
Thanks for your reply. The amount is to be used to fix patio doors, windows, parking lot and roof etc. The way they have described it, it seems that majority of the collected fund will be used right away to fix the issues with the building.
Can I please request you to desrcibe bit more about ACB process? I don't know what ACB is and how do I use it for tax deduction.
Many Thanks,
Jignesh
Yes, in that case, it sounds like regular deductible expenses.
ACB is Adjusted Cost Base for any asset, including stocks, rental property, etc.
It is required to maintain ACB for the purpose of capital gains taxes when the property is sold (or deemed disposed).
Refer:
http://www.taxtips.ca/glossary/adjustedcostbase.htm
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"Mah deah, there is much more money to be made in the destruction of civilization than in building it up."
-- Rhett Butler in "Gone with the Wind"
Thanks Patrick. My property management company will be providing me with a single receipt stating that I have deposited $5000 for this year. So when I file my tax, should I just cost that $5000 as expense and deduct it from rental income?
