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How should I report the expense of new appliance, renovation at tax time? (Canada)

#1

Dear fellow Canadian hosts,

In 2018 I became a new airbnb host and quickly it is tax season as the year grounding down.

To my understand, regular expenses like labor, hydro, water, interests, property tax can be completely deducted but what about the costs of new appliances and home reno? This year I did multiple upgrade include bathroom, insulation, and purchased full set of new stainless kitchen appliances. How should I deduct those costs?

A little detail about my property: it is my vacation property, (so not my principle residence)

Thank you in advance!

Bill

#3

To be frank, it sounds more like you need some time with an accountant who knows the rental business and the associated tax breaks.

With all due respect to any Canadian hosts on here, I’d be looking for professional advice as opposed to anecdotal advice from some random stranger on an internet forum, which may a) be correct, b) be totally incorrect or c) be complete timewating (for you) bullshit.

Just my tuppence worth, as a random stranger on the internet :slight_smile:

JF

#4

I use on online tax preparation program. It prompts me as I go. It also has pop ups that let me know how much is deductible. If I make an error, then I get a red flag that prompts me to go back and delete or change. They also have a tool free line that you can call. It’s Taxact.com

#5

Talk to a real, local, tax preparer.

#6

Guys, thanks for the reply!

Yea it is likely I will end up with a local accountant but just my impression, that a lot of those public accountants are rather not so care about your situation but rather want to have a quick deal done instead of investigating those details, especially those controversy one.

I’d like to equip myself.

Thanks again!

#7

it’s very confusing and it doesn’t get any easier.

My experience has been in talking directly with the CRA then in fact they don’t seem to have any hard-and-fast rules.

But I have been doing is to treat it as a capital cost and amortize it over a period of years. You use a separate form for this.

Another way you can do it is to buy second-hand things that the restore or the Salvation Army and expense it in the same year. At least, thats what I have been doing.

But the way they work it is if you regularly have X percent of your area being used for guests only expense X percent.

Whatever you do, track everything. They can audit you for 7 years.

What I did was put it all on Excel with annotations in detail as to what the expense was.

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