When buying an income property, it is important to know what expenses will become deductions so you can carefully plan out your estimated taxable obligations. This is also broken down by the CRA into two basic types of expenses - current expenses and capital expenses.
List of deductible rental expenses (Current):
- Interest portion of your monthly mortgage payment
- Mortgage fees and premiums
- Condo fees
- School Taxes
- Municipal Taxes
- Property Management Fees
- Utility costs if they are included in the monthly rental amount
- Motor vehicle costs to commute to/from the property
- Legal / other professional expenses
- Advertising costs
List of non-deductible rental expenses (Capital):
- Capital Improvements - This is added to your Adjustable Cost Base (ACB)
- Appliances and other fixtures - These can be depreciated as a separate capital cost.