Line 8860 - Legal, accounting, and other professional fees
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Line 8860 - Legal, accounting, and other professional fees
You can deduct fees for legal services to prepare leases or collect overdue rents.
If you incur legal fees to buy your rental property, you cannot deduct them from your gross rental income (line 8299). Instead, allocate the fees between land and building and add them to their respective cost.
Example
You buy a property worth $200,000 ($50,000 for the land and $150,000 for the building) and incur legal fees of $10,000.
Split the $10,000 proportionately between the land and building. In this case, $2,500 is added to the cost of the land (for a total of $52,500) and $7,500 is added to the cost of the building (for a total of $157,500).
Note
Any legal fees you paid when selling your rental property are deducted from your proceeds of disposition when calculating your capital gain or capital loss. The deduction for legal fees also applies when calculating a recapture of capital cost allowance (line 9947) or a terminal loss (line 9948) .
You can also deduct amounts paid for bookkeeping services, audits of your books and records, and preparing financial statements. You may be able to deduct fees and expenses for advice and help to prepare your income tax return and any related information returns. You can deduct these fees if you needed the help because of your rental operation.
Forms and publications
Related topics
- Land
- Line 8299 - Gross rental income
- Line 9947 - Recaptured capital cost allowance
- Line 9948 - Terminal loss
- Date modified:
- 2016-01-05