Deductibility of Leaky Condo Special Assessments in the

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Hi David, so sorry to hear about your domestic situation. I have been asked whether the large assessments levied by Strata Corporations to pay for water damage repairs to leaky condos, can be deducted from an owners personal income tax when they have moved out and rented the unit.It would seem to me that deductibility may depend on when rental started relative to when the assessments started, so that depending on the timing an owner could deduct as an " unforseen expense"? Also I have heard that politically the Feds up to now have " turned a blind eye", where some of these multi thousand $$ deductions have been made against rental income. I'd appreciate your opinion and experience on this issue. Thanks in advance, Keith.
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David Ingram replies.
Since I know that your Andre Molnar building, was one of the more expensive buildings to repair, I presume you are talking about your own building.
So let's look at two different owners.  
The first bought the apartment as an investment and never even considered renting it out.  He or she gets to deduct the special assessment against their total income from all sources.
The second owner heard that the first owner could write off the leaky expenses because it was rented and moved out and tried to deduct the expenses.  Because they knew the expenses were coming up, the expenses are not deductible but must be added to the undepreciated capital cost of the building.  
It is NOT a grey or gray area.  It is black and white.
And yes, lots of people have read some pamphlet telling them that they can write off the expenses if they rent out the suite.  Not true and if CCRA finds it, they will reverse the expenses and yes, I have seen several where it has happened.
I know of no situation where the feds have turned a blind eye. And, if an employee did knowingly turn a blind eye, they would lose their job.
David Ingram of the CEN-TA REALTY  Group
US / Canada / Mexico tax and working Visa Specialists
US / Canada Real Estate Specialists
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 913-9133 - Fax 913-9123 [email protected]
www.centa.com www.david-ingram.com
Disclaimer:  This question has been answered without detailed information or consultation and is to be regarded only as general comment.   Nothing in this message is or should be construed as advice in any particular circumstances. No contract exists between the reader and the author and any and all non-contractual duties are expressly denied. All readers should obtain formal advice from a competent and appropriately qualified legal practitioner or tax specialist in connection with personal or business affairs such as at www.centa.com. If you forward this message, this disclaimer must be included."
Be ALERT,  the world needs more "lerts"
 
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