Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Porch repairs - Capitalize or Expenses?
Position: Question of fact- betterment or restored to original condition taking into account technological improvements thus situation appears to be expense.
Reasons: Position in IT 128
XXXXXXXXXX 982543
C. Tremblay
October 28, 1998
Dear XXXXXXXXXX:
Re: Porch repairs to rental property
This is in reply to your letter of September 21, 1998, requesting our opinion as to whether extensive repairs to the porch of a rental property can be expensed in the year and deducted from rental income.
The situation outlined in your letter relates to specific proposed transactions. It is the practice of this Department to comment on such transactions only by way of advance ruling. However, we can provide you with the following general comments which we hope will be of assistance to you.
It is a question of fact in a given fact situation whether the tax treatment of an expenditure results in an expense or a capital improvement. In our view, the criteria set out in paragraph 4 of Interpretation Bulletin, IT-128R, Capital Cost Allowance-Depreciable Property, copy attached, are relevant in determining whether an item is expensed or capitalised. Paragraph 4(b) states that where an expenditure made in respect of a property serves only to restore it to its original condition, that fact is one indication that the expenditure is of a current nature. In order to determine if an expense brings an asset to its original condition, it may be necessary to take technological changes into account and the reasons why a particular material was used.
We trust our comments will be of assistance to you.
J. F. Oulton, CA
for Director
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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