We are a retired couple in Ontario, and own Investment Real Estate Property. We would like to sell the property next year. If we invest $30K to upgrade the property (kitchen, bathroom, etc), we will be able to sell it for $50-$60K more. We were wondering if we should claim the upgrade as maintenance (the place is 40 years old, and is in real need of maintenance), or wait until we sell it and then claim it as Capital Gains Deduction?
Right now we are paying 20% Income Tax on average.
In the year we sell the property, the Capital Gain on the property will be about $360K, split 50/50 between us. As we understand, we will have to add $180K to out income, and this will put us into the 50% tax brackets, and we will also lose OAS for a year.
What should we do in this case?