• legal fees related to mortgage financing You deduct these fees over a period of 5 years, regardless of the term of your loan. Deduct 20% (100% divided by the 5 years equals 20%) in the current tax year and 20% in each of the next 4 years. The 20% limit is reduced proportionally for fiscal periods of less than 12 months. If you repay the loan before the end of the 5-year period, you can deduct the remaining financing fees then. The number of years for which you can deduct these fees is not related to the term of your loan. If you incur standby charges, guarantee fees, service fees, or any other similar fees, you may be able to deduct them in full in the year you incur them. For more information, see Interpretation Bulletin IT-341R4, Expenses of Issuing or Selling Shares, Units in a Trust, Interests in a Partnership or Syndicate and Expenses of Borrowing Money. You can choose to treat finance fees you paid and the interest on money you borrowed to acquire depreciable property as capital expenses. If you refinance your rental property to get money for a business or other investments, you may be able to claim the interest expenses on Form 5000-D1, Federal Worksheet (for all except non-residents). Go to Line 22100 – Carrying charges and interest expenses or the "Expenses" chapter in Guide T4002, Self employed Business, Professional, Commission, Farming, and Fishing Income. If the funds are for personal use, you cannot deduct the interest expenses. Another route is a lease-option, also known as option to buy. In this situation, you would rent the property, but sign an “option to buy” for an agreed-upon price. This legally binding path to property ownership might take a little longer, but is still a viable option if you have the funds. Example Karim owns and rents a semi-detached house. This year, he 31
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