# Claiming property tax on a rental that has not yet been assessed



## gerogesin (Jan 3, 2014)

I bought a rental last June (new build) and my property tax has not been determined. I assume it will be finalized this year and will be expecting to retro pay for 2014 along with 2015. I am trying to finalize my tax return and have not yet figured out what the best solution is. 

Do I just leave the property taxes paid ZERO and submit my tax-return? And then send in a T1-ADJ when I receive the exact property tax amount?

Also, what part of closing cost is tax-deductible (if any)?

Thanks  And this is for Ontario if that matters.


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## Eclectic12 (Oct 20, 2010)

If you want the least amount of risk ... submit zero and adjust after the fact.

If you don't want to wait, you could find out what similar ones are paying for property tax, put in a safety factor of say 30% and go with that. When the real numbers come out, you can send in the T1-ADJ but by understating it, you should get some benefit now with only a bit of risk.


I'm not sure about the closing costs ... so I'll leave that to those who have looked into it.


Cheers


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## gerogesin (Jan 3, 2014)

Thanks for the response! To keep things simple, I will just leave it blank and send the ADJ later. Because of this, I may end up owing on my tax return. Will have to buy some RRSP unless some of the closing cost is deductible. 

Is purchasing a washer/dryer and garage door opener be tax-deductible if the builder did not include them? I believe it can only be claimed as CCA which I don't believe is worth it.


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## Guban (Jul 5, 2011)

You need to use CCA as they are fairly expensive items with enduring value. Was it a really inexpensive garage door opener?

Why is it not worth it? You have the receipts, so it isn't too much trouble. Just key it in in your software.


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## stardancer (Apr 26, 2009)

Leave the property tax at zero; do not submit an adjustment; property taxes are claimed in the year paid, so would be in 2015.

Closing costs are rolled into the ACB of the property and are not tax deductible.
Appliances go into class 8; not sure about the garage door opener; it might depend on the cost as to whether it is class 8 or a current expense.


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## Just a Guy (Mar 27, 2012)

You could check your bill of sale, there should be an "adjustment" line in regard to property taxes. If it's not there, then claim $0.


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## gerogesin (Jan 3, 2014)

I figured it isn't worth claiming appliances as CCA will have a recapture when we sell. We don't expect the value of the home to depreciate so that being said, our recapture would be greater. 

The garage opener was $200 and installed by myself. We also bought blinds for the place as well.


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## CPA Candidate (Dec 15, 2013)

gerogesin said:


> I figured it isn't worth claiming appliances as CCA will have a recapture when we sell. We don't expect the value of the home to depreciate so that being said, our recapture would be greater.
> 
> The garage opener was $200 and installed by myself. We also bought blinds for the place as well.


The appliances are in a different class than the building. You should claim the CCA available.


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## newuser (Sep 16, 2014)

CPA Candidate said:


> The appliances are in a different class than the building. You should claim the CCA available.


Plus there will be no recapture on appliances since it is reasonable that their value actually does depreciate over time.


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## gerogesin (Jan 3, 2014)

So for class 8 expenses, when would there be a recapture cost? We spent roughly $1500 on appliances, $1000 on blinds and $200 on the garage opener after we took possession from the builder. I need to find a book or website that explains CCA and how it is calculated as I am still quite confused about it.


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## newuser (Sep 16, 2014)

gerogesin said:


> So for class 8 expenses, when would there be a recapture cost? We spent roughly $1500 on appliances, $1000 on blinds and $200 on the garage opener after we took possession from the builder. I need to find a book or website that explains CCA and how it is calculated as I am still quite confused about it.


Recapture happens when you sell the asset for more than the residual value (i.e. cost minus depreciation). If you claim CCA on the land, it is a bad idea cuz the land usually never depreciates on the open market, so the recapture amount will be huge. For appliances, etc., it is reasonable to expect that they do not resell for more than the residual value.


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## Numbersman61 (Jan 26, 2015)

newuser said:


> Recapture happens when you sell the asset for more than the residual value (i.e. cost minus depreciation). If you claim CCA on the land, it is a bad idea cuz the land usually never depreciates on the open market, so the recapture amount will be huge. For appliances, etc., it is reasonable to expect that they do not resell for more than the residual value.


You seen to be implying that one can claim depreciation (capital cost allowance for tax purposes) on land. In no circumstances can one claim depreciation on land.


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## newuser (Sep 16, 2014)

Numbersman61 said:


> You seen to be implying that one can claim depreciation (capital cost allowance for tax purposes) on land. In no circumstances can one claim depreciation on land.


Ah right! I confused that with the building portion of it.


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## gerogesin (Jan 3, 2014)

newuser said:


> Recapture happens when you sell the asset for more than the residual value (i.e. cost minus depreciation). If you claim CCA on the land, it is a bad idea cuz the land usually never depreciates on the open market, so the recapture amount will be huge. For appliances, etc., it is reasonable to expect that they do not resell for more than the residual value.


If we claim CCA for class 8, and then sell our property (lets say in 20years), will we have a recapture (since we are not selling the appliance individually)?
ie. 300k home with 1.5k appliance that sells for 600k in 20years. Since I am including the appliance, would there still be a recapture? If so, how much?

Thanks.


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## Numbersman61 (Jan 26, 2015)

gerogesin said:


> If we claim CCA for class 8, and then sell our property (lets say in 20years), will we have a recapture (since we are not selling the appliance individually)?
> ie. 300k home with 1.5k appliance that sells for 600k in 20years. Since I am including the appliance, would there still be a recapture? If so, how much?
> 
> Thanks.


In most instances, there is no allocation in the agreement between land, building and appliances and so you must be able to justify the allocation you make when filing your return. If you are selling to another investor, you can bargain with them as to the allocation. Remember the increase in land value in most cases is a capital gain.


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