Definition
The tax distinction between spending that maintains or restores a property, deductible in the same year, and spending that acquires or improves it, written off through CCA.
The test
A current expense restores the property or keeps it in the condition it was in when you bought it; it's deductible in the year. A capital expense acquires, extends or improves the property; it's added to the property's cost and written off through capital cost allowance (CCA). The Canada Revenue Agency looks at whether the expense provides a lasting benefit, whether it improves the property beyond its original condition, whether it replaces a separate asset rather than a part, and whether the amount is significant compared with the property's value.
Revenu Québec's examples
- Current expenses: replacing all the windows, or completely restoring the balconies, roof or plumbing, when the work restores the original condition; property taxes, insurance, interest on borrowed money, advertising; for repairs you do yourself, the cost of materials only.
- Capital expenses: the purchase price and acquisition costs, including the welcome tax; repairs needed to rent out an older building you just bought; appliances rented with the unit; adding a fireplace or a garage.
This tax classification is separate from the one used by the Tribunal administratif du logement (TAL): a rebuilt roof can be a current expense for tax purposes and still count toward the 5% of capital expenditures used in rent fixing. Every contractor you pay is reported on form TP-1086.R.23.12.
Learn more
Glossary terms
Official sources
General information, not legal advice
This page summarizes the rules in force in Québec on the update date shown, for information only. It does not replace advice from a lawyer, notary or accountant, nor the official texts: when in doubt, rely on the sources above and on the Tribunal administratif du logement.