Depreciation

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From: Natalie Gibbeson


I recently had a depreciation report done on our investment unit after renovations.
The question was asked if we wish to claim the full renovation costs now or capitalize it over 5 year period. Puzzled , I didn't know this was an option. I have left it with my accountant who is yet to get back to me but I thought I'd run it past the forum...
Does any one have any advice or has any one heard of this before?
nat.

 

[DaleGG]

Reply: 1
From: Dale Gatherum-Goss


Hi Natalie

The only thought that goes through my mind is that the person who asked you the question might have thought that you could argue that the renovations were repairs.

Repairs would be tax deductible when you spend the money, unless they are undertaken in the first year of ownership.

Renovations need to be depreciated.

I will be interested to hear what your accountant suggests to you.

Dale

 

[WebBoard]

Reply: 1.1
From: Natalie Gibbeson


Dale,

Spoke with my accountant.Due to the fact that we renovated prior to leasing the renovation was not a repair so must be capitalized.He advised to do so for income tax depreciation as well.Thanks for responding.
Nat