The Property Poser experts have received a rather interesting tax-related query from a reader who rents out his home to officers from the diplomatic services from time to time.
When their property is occupied, the reader and his wife go and live on a camping site, which is admittedly less comfortable than their own home but far less expensive. In this way they are managing to save a bit of money for their later years.
There is still a small bond on the property and while they know that they can deduct the interest portion of this bond from the rental income, the reader would like to know whether they can deduct the expenses incurred from their camping expeditions as these are “necessary costs” in renting out their property.
“Thereafter, certain expenses that are specifically mentioned in the Income Tax Act and other general expenses incurred in producing the income may be deducted.”
As a general rule, Radue says expenses that were incurred in improving the property cannot be deducted as these are of a capital nature.
“But should they wish to sell the property one day, these expenses could be taken into account when determining any potential capital gains.”
Radue says the reader correctly mentions that the interest portion of his bond payment could be claimed as a deduction.