ARE CMHC FEES TAX DEDUCTABLE for rental houses? - YES!
QUESTION:
The CRA booklet regarding rental income and expenses, states on page 11, that mortgage guarentee /insurance fees are tax deductable at 20 % per year over 5 years.
We purchased a rental home in 2006, and would like to deduct the CMHC fee as a legitimate rental expense.
One CA states this is correct.
One CGA says no.
Is the CMHC fee tax deductable at 20 % per year or does it have to be added to you ACB ?
Is the mortgae processing fee deductable in the first year or at 20 % per year. _________________________________________________________________
david ingram replies:
Although all other expenses in a rental house are considered to be on a cash basis and only deductible in the year you actually pay them, the CMHC mortgage fee is usually spread over 5 years at 20% a year. this is almost strange, because technically you do NOT actually pay it but have it added to the outstanding mortgage.
However, they give you the 20% a year so take it.
The CRA booklet regarding rental income and expenses, states on page 11, that mortgage guarentee /insurance fees are tax deductable at 20 % per year over 5 years.
We purchased a rental home in 2006, and would like to deduct the CMHC fee as a legitimate rental expense.
One CA states this is correct.
One CGA says no.
Is the CMHC fee tax deductable at 20 % per year or does it have to be added to you ACB ?
Is the mortgae processing fee deductable in the first year or at 20 % per year. _________________________________________________________________
david ingram replies:
Although all other expenses in a rental house are considered to be on a cash basis and only deductible in the year you actually pay them, the CMHC mortgage fee is usually spread over 5 years at 20% a year. this is almost strange, because technically you do NOT actually pay it but have it added to the outstanding mortgage.
However, they give you the 20% a year so take it.
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