Real Estate

Rental property improvements before resale? (tax/CCA/capital gains question)

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  • Oct 6th, 2020 2:32 pm
[OP]
Member
Jan 3, 2008
260 posts
28 upvotes
Victoria

Rental property improvements before resale? (tax/CCA/capital gains question)

Hey there - my family owns a rental property and the washer/dryer is kinda crapping out. They are also likely to sell this place in the coming months. Should they replace the washer/dryer before selling?

a.) If they do, can they claim the full amount of the replacement appliances as an expense? Or do they have to follow a CCA schedule and only claim some of it each year?
b.) How does that outstanding CCA balance get handled if they do sell the condo soon - perhaps within 2-6 months of purchasing the new appliances?
c.) From your experience, how much does a new washer/dryer typically affect the resale value? There's currently a smart washer/dryer combo on sale for about $1800. Do things like that typically pay for themselves in a sale, regardless of taxes?

Is there anything else you'd recommend my family doing to this place before it sells, that they can claim against their income, that will add value to the place? (I assume it's a good idea to take on expenses that also improve resale, as the expenses can be claimed in full, but the gains are only half taxed... make sense?) Decor is pretty modern already - likely to re-caulk the baths, and de-clutter the hell out of the place, but any other things, ideally that will help offset the income from capital gains when it comes to tax time?

Thanks in advance!
3 replies
Sr. Member
Feb 19, 2019
951 posts
1182 upvotes
Stouffville ON
It depends on the property. If it's entry level buy used appliances that look decent.

a) it's an asset so it should be set up as class 8,
b) when the condo is sold you will assign the value to the existing appliances on your tax return
c) you need to have working appliances, washer and dryer are easy to replace therefore the impact is non existent, there could be more impact on kitchen appliances because the make good first impression.

Make the place look best with minimum amount of money for best return. Again this depends on the place, if the buyers are buying for themselves they will want move in ready.
Full Time and Full Service Realtor
[OP]
Member
Jan 3, 2008
260 posts
28 upvotes
Victoria
senasena wrote: It depends on the property. If it's entry level buy used appliances that look decent.

a) it's an asset so it should be set up as class 8,
b) when the condo is sold you will assign the value to the existing appliances on your tax return
c) you need to have working appliances, washer and dryer are easy to replace therefore the impact is non existent, there could be more impact on kitchen appliances because the make good first impression.

Make the place look best with minimum amount of money for best return. Again this depends on the place, if the buyers are buying for themselves they will want move in ready.
Thanks for the response! Regarding "a)" above, I've received other information that washer/dryer replacement can be expensed immediately, as it's a maintenance issue. That would be much more beneficial, but I was skeptical based on what I've read.
Sr. Member
Feb 19, 2019
951 posts
1182 upvotes
Stouffville ON
kurt16 wrote: Thanks for the response! Regarding "a)" above, I've received other information that washer/dryer replacement can be expensed immediately, as it's a maintenance issue. That would be much more beneficial, but I was skeptical based on what I've read.
I don't agree that replacing washer and dryer is a maintenance, it's like replacing a car, nobody will be able to make an argument that it's expense.

I see how some may say it because let's say if your replace old asphalt shingle roof with new asphalt shingle roof which is equivalent of the old roof you can expense it as maintenance, but if you replace old asphalt shingle roof with new metal roof it's a capital asset.

I could see it if the appliance purchased is used and of little value (under $500), I don't believe cra would have an issue with that because of the small amount.
Full Time and Full Service Realtor

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