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Can you provide clarity on 2 question regarding rental properties and the T776 form:
1) How do you calculate the Land vs Building Costs for the Capital Costs when purchasing a new rental property? Or is 100% of the purchase price able to be claimed in the CCA Capital Cost?
2) If you are using a HELOC/Line of Credit to fund the downpayment and repairs of the rental property can you claim the interest on the HELOC in the Interest & Bank Charges annually?
Hi Frank,
A real estate agent or certified appraiser can determine the portion of the purchase price that is attributable to the land and the building. In cities like Toronto or Vancouver, the % of the purchase price that relates to the land tends to be higher. Note that only the building portion of the purchase price can be amortized (at a rate of 4% per year for residential buildings and 6% per year for commercial buildings).
Interest paid on money borrowed to make a down-payment on an investment property as well as to fund repairs to the investment property is tax deductible.