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Deducting Travel Expenses From Rental Income

Author: Brad Howland
First Posted: Oct. 3, 2005

Question

"I live in Edmonton and just purchased a rental property on Vancouver Island. Can I deduct my travel costs to and from the property? What else can I deduct?"

Answer

If you own one rental property, the only travel expenses you can deduct are for repair and maintenance purposes if you personally do the repairs. The property must be in the "general area where you live," so I don't think this property would qualify.

If you own two or more properties the restrictions loosen up and you can deduct travel for the purpose of collecting rent, supervising repairs, or generally managing the properties.

This is all explained in the Rental Income guide. You can download a pdf copy from CRA and print it out:

http://www.cra-arc.gc.ca/E/pub/tg/t4036/t4036-e.pdf

Most other expenses, such as mortgage interest, property taxes, etc. are 100% deductible. Repair expenses of a "current" nature are deductible in the year they are incurred. Repair expenses of a "capital" nature are added to the capital cost of the property.

You can elect to deduct depreciation on the building, but I don't advise it as you may dispose of it in the future at a gain, and end up having to recapture all the prior depreciation claimed and pay tax on it in one year.


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