Can I Deduct Full Cost of Roof on Rental Property?

wut? You can't claim home renos on your income tax (for the most part).

Is the house a rental property?
If so then there are ways to do this...

Otherwise no, you can just deduct expenses from your regular job income....

If this is a business or rental property the new roof would be added to the cost of the building. You can then take a CCA claim (depreciation) on the building. However if the building is eventually sold for more then you paid for it you will have to recapture all years of that CCA claim. That will have to be reported as income in your tax return in the year of sale.

DaveTheDude wrote: ↑ If this is a business or rental property the new roof would be added to the cost of the building. You can then take a CCA claim (depreciation) on the building. However if the building is eventually sold for more then you paid for it you will have to recapture all years of that CCA claim. That will have to be reported as income in your tax return in the year of sale.

If the roof is replaced with the same quality and not an upgrade (ei asphalt shingles with new asphalt shingles) it can be expensed in the year, if it's an improvement over the original roof it would be a capital expenditure.
Here is the link which will help OP determine if this is a current expense or capital.
https://www.canada.ca/en/revenue-agency ... enses.html

senasena wrote: ↑ If the roof is replaced with the same quality and not an upgrade (ei asphalt shingles with new asphalt shingles) it can be expensed in the year, if it's an improvement over the original roof it would be a capital expenditure.
Here is the link which will help OP determine if this is a current expense or capital.
https://www.canada.ca/en/revenue-agency ... enses.html

There is a difference in roof repairs that are expensed and a new roof which has a lasting benefit. New roofs are capitalized.

There was one rare case of a half roof put on where the judge did allow it as an expense.

https://turbotax.community.intuit.ca/co ... /00/915511

DaveTheDude wrote: ↑ There is a difference in roof repairs that are expensed and a new roof which has a lasting benefit. New roofs are capitalized.

There was one rare case of a half roof put on where the judge did allow it as an expense.

https://turbotax.community.intuit.ca/co ... /00/915511

No, cra is pretty clear on it.
In the link I have provided explains pretty well.

The cost of repairing a property by replacing one of its parts is usually a current expense. For instance, electrical wiring is part of a building. Therefore, an amount you spend to rewire is usually a current expense, as long as the rewiring does not improve the property beyond its original condition.

replace wire with shingles and it's exactly the same situation.

This is a rental property.

Thanks for your responses.

Can anybody give their opinion on question no. 2 above? Thanks.

Sophie88 wrote: ↑ Thanks for your responses.

Can anybody give their opinion on question no. 2 above? Thanks.

Can you clarify why you don't want to claim it? is it because you paying cash and they are not charging you hst?

A lot of times this depends on your own personal preference.

First and foremost, if I was you, i'd recommend you pay pay HST on something like a roof on a house. It's one of the key pieces keeping your house safe. Go with a reputable company that can handle proper warranty. Don't go with the cheapest company out there. a lot asian/indian companies out there will do a roof for $5-6k, claiming 25 year warranty and they completely disappear after.

2nd, as someone has mentioned that unless you are "upgrading" your roof, you are allowed to claim this as an current expense, rather than capital expense.

So if had regular builder grade shingles before, you'd have to get similar grade shingles to be able to claim this amount.

If you get shingles that are better grade, or metal, they will not be considered "original equipment", therefore you'd have to capitalize and do a CCA over the life of the building.

IMO, i'd always recommend to capitalize large expenses such as a roof, primarily because if this claim brings forth an audit, I wouldn't want to deal with it.

But, its your preference.

senasena wrote: ↑ Can you clarify why you don't want to claim it? is it because you paying cash and they are not charging you hst?

I estimate the amount of Income tax savings will be approximately same as the HST savings. If I deduct the whole amount, I might be audited and I have to justify my reasons. I am minimizing the hassle of an audit

This replacement is purely maintenance because the shingles lasted only 14 years, not the warrantied 25 years. I have pictures and documents to prove this is the case. Based on your explanation, I believe I have a strong case that this is pure repairs and maintenance. Still, who wants to speak with those friendly auditors?

Just curious, what will be the downside of not deducting the roof cost when I eventually sell the house?

Sophie88 wrote: ↑ I estimate the amount of Income tax savings will be approximately same as the HST savings. If I deduct the whole amount, I might be audited and I have to justify my reasons. I am minimizing the hassle of an audit

This replacement is purely maintenance because the shingles lasted only 14 years, not the warrantied 25 years. I have pictures and documents to prove this is the case. Based on your explanation, I believe I have a strong case that this is pure repairs and maintenance. Still, who wants to speak with those friendly auditors?

Just curious, what will be the downside of not deducting the roof cost when I eventually sell the house?

That's common, shingles never last as long as advertised.

It's not going to be a full blown audit, cra may simply request copies of the repairs and maintenance invoices and description of what it was, is it an upgrade or not, it really is not as big of a deal as people make it out to be.
It will have no effect on selling a house, no buyer cares about how you handled your taxes.

senasena wrote: ↑ That's common, shingles never last as long as advertised.

It's not going to be a full blown audit, cra may simply request copies of the repairs and maintenance invoices and description of what it was, is it an upgrade or not, it really is not as big of a deal as people make it out to be.
It will have no effect on selling a house, no buyer cares about how you handled your taxes.

But a buyer does weigh major costs like a roof replacement when making the big decision. If this is true is there economic benefit (improvement)? Wiring behind the walls is something that buyer would not notice until they broke the surface.

Staffah wrote: ↑ But a buyer does weigh major costs like a roof replacement when making the big decision.

I didn't say that new roof has no impact.
I said that when the seller replaced the roof, what they have done with it for tax purposes has no interest to the buyer, they just don't care what the sellers tax return looks like. ;-)