Real Estate

Interest deductible for HELOC used for an income property to be converted to an SDU

  • Last Updated:
  • May 17th, 2021 4:01 pm
[OP]
Newbie
Aug 24, 2011
66 posts
6 upvotes

Interest deductible for HELOC used for an income property to be converted to an SDU

Hi,
I've just used a HELOC to close on a property and going to use the same HELOC for building a legal SDU.
If I rent it out only for a month or a couple of months at the end of the year when the work is completed, what happens with the HELOC interest?
I read about soft costs and my understanding I can only deduct interest against a rental income from that property. And the rest will go to the ACB?
Is that a correct understanding? Cannot I create a rental loss in that year?
3 replies
Deal Addict
Nov 13, 2013
2896 posts
1606 upvotes
Ottawa
Your question is confusing. You are trying to rent it out only for a month and then return it to personal use? Or are you thinking the interest will be more than your revenue this year? If that latter yes you can have a loss. It can be used against even employment income. You better not have a loss for too long or you invite an audit.
[OP]
Newbie
Aug 24, 2011
66 posts
6 upvotes
fogetmylogin wrote: Your question is confusing. You are trying to rent it out only for a month and then return it to personal use? Or are you thinking the interest will be more than your revenue this year? If that latter yes you can have a loss. It can be used against even employment income. You better not have a loss for too long or you invite an audit.
Thank you! No personal use, it's the latter you stated. Of course, only for the year of renovation, at least the intention is not to show any losses later.

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