My client owned a rental unit in Whistler. In 2024, the property was available for rent for 84 days and vacant for the remaining 281 days. The owner did not use the property personally at any time during the year. Expenses such as management fees and repairs were incurred throughout 2024.
My understanding is that deductible expenses should be prorated based on availability for rent (84/365), with the remaining portion of the expenses added to the cost of the building. Am I correct??
Maybe, but not necessarily. Why was it “available to rent” for 84 days but not rented? Why was it “not available to rent” for 281 days? Was there a major structural renovation or something? And if it was vacant, was the owner a Canadian citizen? (might be subject to UHT)
This was noted on the info sheet generated by the management company. The unit may have been closed due to low demand during the non-ski season
I would ask the client (landlord) how the management company defines “closed”. “Low demand” doesn’t mean it isn’t “available”. Quite the contrary - if it isn’t RENTED, it would be AVAILABLE, and if it is available-to-rent then the expenses are typically deductible. If I was the owner, I’d want to consider it available-to-rent unless there was some reason it COULDN’T be rented, like a major renovation or a forest fire, etc. If the owner simply DECIDED not to make it available, then the expenses are not deductible, and not added to the capital cost. Further, the capital cost (for CCA purposes) should be reduced for the portion of time it was not available-to-rent.
Ok will ask the management company directly. Thank you