Buying Land

[angiek]

I did a search here and learned that if you buy land and do nothing with it then you can not write off the interest payments.

My question is if I buy land and :
It would be lake side and put a trailer or cabin on it. Rent it out during the summer as a small business, maybe a few dates during the winter since this lake has an active ice fishing community ,can I then write off the interest for the loan and other things like the cost of the trailer, fees for someone to look after it since I live in BC and the land is in Manitoba?
I googled it but got easily confused :o

[engo]

I think expenses on raw land can be offset the income you received. Any excess amount (i.e. expenses over income) will be added to the cost of land. i'm too lazy to look it up but it should be discussed on CRA website. Hope it helps.

[sunnybono]

I think expenses on raw land can be offset the income you received. Any excess amount (i.e. expenses over income) will be added to the cost of land. i'm too lazy to look it up but it should be discussed on CRA website. Hope it helps.

Yes. The cost of owning land (expenses) is capitalized. That is, when you sell the land, the expenses that were incurred while you held it just get added to your cost base. One smart thing to do is to plant some christmas tree and classify the land as farm land thus get the $500k capital gains exemption on it!!!!

sk

[Khrak]

Yes. The cost of owning land (expenses) is capitalized. That is, when you sell the land, the expenses that were incurred while you held it just get added to your cost base. One smart thing to do is to plant some christmas tree and classify the land as farm land thus get the $500k capital gains exemption on it!!!!

sk


Would you have to at least attempt to sell the trees? Could you donate them to some christmas charity and claim some more tax exemption? ;) (Not that I'm planning on buying land, just curious.)