A few months ago I spent $100,000 to renovate an existing rental property.

Question

2627 viewsDecember 28, 2018Accounting

0

Mark (anonymous) Posted December 28, 2018

From now on, should I add the $100,000 onto my current un-depreciated amount to calculate the 4% annual depreciation (CCA)?

When I sell my house in the future, how do I calculate my capital gain, since now my property price is no longer the “original” purchase price, but $100,000 more.

1 Answer

score 0 · Answer 1 · 2018-12-28T16:44:39+00:00

Hi Mark,

The renovations you made to your rental property will increase the cost basis of your property. For example, assume that you purchased your rental property for $400,000 and made $100,000 of renovations. As a result, the cost basis for your rental property will be $500,000 when calculating capital gains realized upon sale. Furthermore, you can depreciation the renovations you made at a rate of 4% per year. Note: Any depreciation claimed will be added to your income in the year of sale.

A few months ago I spent $100,000 to renovate an existing rental property.

1 Answer

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