# Basement suite



## Mtlcouple (Jun 19, 2012)

Hi, 
Its my first time post,
Need some advice from the pros.*

We bought a duplex in Montreal 2 years ago.*
I started renovating the unfinished basement a few months ago.*
I'm thinking I could turn this into a basement suite for extra income.*

Can I deduct the*money that I have spend on the basement renovations*in 
the future when I rent it out as a basement suite.*

Is it legal to have the *breaker panel in the basement suite?*
The panel has both the main floor and the suite on it.


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## Montrealer (Sep 13, 2010)

I can answer this for you:

We bought a duplex in Montreal 2 years ago.*
I started renovating the unfinished basement a few months ago.*
I'm thinking I could turn this into a basement suite for extra income.*
*- Good decision and smart move! It will be one of the best investments you ever make*

Can I deduct the*money that I have spend on the basement renovations*in 
the future when I rent it out as a basement suite.*
*- Yes, it falls under an expense and it is tax deductable in Quebec and as for your income, the revenue from the property is taxed and since it's a revenue property, when it's sold it's taxed as well *

Is it legal to have the *breaker panel in the basement suite?*
The panel has both the main floor and the suite on it. 
*- It is legal, just make sure that you always have access to it in case you need to work on it or fix something, my suggestion would be to move it but it might be costly*


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## Young&Ambitious (Aug 11, 2010)

Note this a capital item not a deductible item! 

You can claim CCA on the reno's, but you cannot expense it. Refer to CRA for more info, they have a great website with tons of info on this topic.

Goodluck on your reno's


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## Cal (Jun 17, 2009)

For a more thorough understanding of the tax implications for your rental property you should have a quick consult w an accountant.


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## Mtlcouple (Jun 19, 2012)

Thanks for your help guys. It is appreciated. 

Montrealer

I should expand on this:

"Is it legal to have the *breaker panel in the basement suite?
The panel has both the main floor and the suite on it."

Is it ok if I move out and rent all three floors.
Ie the tenant from the first floor has no direct access to his breaker panel.


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## Mtlcouple (Jun 19, 2012)

Thanks for the replies. 
This winter I'll read the cra website.


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## OhGreatGuru (May 24, 2009)

Mtlcouple said:


> ...
> 
> "Is it legal to have the *breaker panel in the basement suite?
> The panel has both the main floor and the suite on it."
> ...


1. I can't speak to the legality of the location of the breaker panel in Montreal, but there are serious practical considerations. As landlord, you do not have a right of unrestricted access into a tenant's leased space. So is it really advisable to have the main panel in the tenant's space? And it gets worse if you have 3 apartments that may need access to that panel.

2. Unless Montrealer can answer this from his experience, you should probably consult your municipality. Regulations respecting basement suites, conversions of dwellings to apartments, zoning, etc., tend to be highly local.


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## caricole (Mar 12, 2012)

Mtlcouple said:


> We bought a duplex in Montreal 2 years ago.*
> I started renovating the unfinished basement a few months ago.*
> I'm thinking I could turn this into a basement suite for extra income.*
> 
> ...


Being from MTL 

Being familiar wih construction, renovating, permits etc

I will not tell you what you can or should do, only what I would do in you case

Go to the city hall or borough to inquire what you CAN DO

Obtain a plan acceptable for the renovations or additions, does not have to be signed by an ARCHITECT...a technician is sufficient, as long as it is ACCEPTABLE

You must obtain an ADDITIONAL ADRESS for the new dwelling ( permit and pay)

Once all the works are finished, the city will issue new évaluation for the 3 dwellings( if the zoning allows 3 dwellings in an area of duplexes)

If for the time bieng you are doing renovations WITHOUT PERMIT AND PLANS, you could encounter zoning and permit proplems

Thus, my suggestion...play it prudent according to the rules and not according what you or anybody else «THINK»

The cityclerks do not appreciate to be put in front of a «FAIT ACCOMPLI» without asking their permission before...just remember

Remember....if your girlfriend helps in the renovations...the moment she starts to hit her fingers with a hammer, she learns to swear lik a real constructionworker....its part of the game:hopelessness:


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## zylon (Oct 27, 2010)

*a horror story - what can you do?*









When a renter leaves a basement in conditions like this, where can homeowners turn for help? 
A local home owner says she reached out to police, Alberta Health Services, Victim Services, 
and even Animal Control after her basement suite was left in ruins, and received no assistance. 
Photo by JORDAN THOMPSON

http://www.fortmcmurraytoday.com/ArticleDisplay.aspx?e=3592201


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## OhGreatGuru (May 24, 2009)

Zylon:

The horror story doesn't really belong on this thread, but it sounds like home owner didn't understand the risks they were getting into. I have no direct experience, but there are lots of similar horror stories of tenants from hell on this & similar forums. 

Police won't get involved. Leaving a messy apartment isn't a crime. Theoretically causing deliberate property damage is, but police haven't the time or resources to chase after bad tenants. That's what small claims court is for if owner really wants to pursue it. Unfortunately these kinds of tenants usually have no money to make it worthwhile suing them.

As for other government agencies, the taxpayer isn't paying them to help landlords manage their rental properties. (And regrettably in some provinces politicians have set up agencies that make it more difficult for landlords to deal with bad tenants)

The lady has my sympathy, but not to the extent that I would feel obligated to pay for her problems. To put it harshly, why should the general taxpayer be expected to compensate a business owner for their business losses? Maybe all landlords would like to contribute to a mandatory insurance fund to pay for damages caused by bad tenants? You can imagine how well that idea would go over!


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## Spudd (Oct 11, 2011)

I agree. I read the story and the lady even called Victim Services! Sorry lady, but Victim Services is not for situations like this. OK, it was messy and gross, and I guess the dog pee means you'll have to change out some of the furniture and carpet, but that is the risk you take when you rent out your basement. Next time maybe rent it out unfurnished to reduce the risk.


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## kcowan (Jul 1, 2010)

That is what security deposits are meant to cover. At least there was no damage to the walls. The owner sounds like a socialist.


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## OhGreatGuru (May 24, 2009)

Unfortunately it is my understanding that some provinces (such as Ontario) no longer allow damage deposits.


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## sharbit (Apr 26, 2012)

some people shouldn’t be landlords... She's saying she has to throw out all the furniture which seems like a bit of an emotional response; the 20,000$ the lady is claiming sounds excessive.


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## Berubeland (Sep 6, 2009)

Ho Hum...this is common here in Ontario. With no damage deposits or cleaning deposits combined with restrictive garbage disposal in most areas now, tenants just leave crap behind. 

Pretty awful really. In Alberta they do have security deposits and pet deposits and a lot better laws for landlords... this is why a scene like this makes the newspaper. I have 3 apartments very similar to this just this month. Sigh.


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## sharbit (Apr 26, 2012)

what's the logic behind Ontario disallowing damage deposits?


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## kcowan (Jul 1, 2010)

I think it was because it was considered a way around rent control. They were seldom returned to the tenant. You can still take the tenant to small claims court.


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## themortgageguy (Jun 28, 2012)

Just my two cents worth:

1) Thoroughly understand the CRA CCA implications (as was wisely suggested) as they _*may*_ effect your principle residence deduction for the capital gains on the home when you eventually dispose of it. I used to do A LOT of tax returns but can't quite remember if there are implications.

2) If you do rent out all of the levels (i.e. vacate the house) I would confirm whether or not it would be considered a deemed disposition from personal residence to income generating property. I think it would. Confirm it.

3) Whatever you do make sure the basement apartment is legal. Lenders like to see income from legal apartments when the owner is looking to borrow against it.
Don't know if you need the income inclusion for borrowing, but sounds like you're investing with more to come so better to know that now.

4) Owner occupied rentals result in a better rate with some lenders i.e. some lenders charge a premium for residential rentals over owner occupied residential rentals. Not a huge premium but still a premium.


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## Berubeland (Sep 6, 2009)

Well in areas where they have a cleaning or damage deposit, it seems to be less than a full month's rent. There are quite a few problems with tenants getting their deposits back. Not always but sometimes. 

One of the people who emailed me during the time of the trademark dispute was complaining that they had been told their deposit would be returned but it never was. 

On the other hand, it does of curse encourage tenants to clean and keep their places clean and leave you a forwarding address. 

With last month's rent deposits that can only be applied to last month's rent it secures you more against skips or tenants who move and don't give you proper notice but then you get a messy place. 

Realistically, IMHO nothing secures you from bum tenants. In the case of professional tenants they are more skilled at deception than you would imagine. It's a lucrative con these days. As far as I can tell there is not a jurisdiction that doesn't have these. There are stories from every state and province. The only real difference I can tell is how long it can go on. Most places have appeal processes in place with the courts even for straightforward landlord matters. You could conceivably appeal all the way to the Supreme Court with all kinds of judicial delays along the way. 

So this is not an Ontario problem, it's a world problem as far as I can tell.


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## Just a Guy (Mar 27, 2012)

In business, nothing can protect you against lousy customers who don't pay, clients who steal, vandals who damage, or, as Berubeland recently discovered, crazy employees.

Renting is a business, remember that. It comes with risk, which you should try to minimize through techniques like proper screening...but it doesn't always work. 

No one expects the government to bail out a business, why do you expect it for landlords? Heck, I'd bet everyone on this board has probably harmed some business in some small way with no qualms (taken office supplies like a pen at least). 

I've owned rentals and businesses a long time, I've taken my fair share of lumps, but I also realize it's of being in business. I don't like, or advocate it, but I deal with it quickly, and try to avoid doing it again. Think of it as the price of education.

BTW, this is one of the reasons why cash flow and margins are important and a key reason why there are successful investors (business owners) who have proper ones versus the many unsuccessful ones who fail and complain about the risks.


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