Click here. Angel Ronan SHOKUNIN Report 020226: Under the CRA’s 2026 guidelines, whether you receive a tax refund depends entirely on how the $50,000 renovation is classified. Even though you describe them as "basic," the CRA has a strict definition of what can be deducted immediately. 1. The "Refund" Trigger: Current vs. Capital To get a refund this year, your $50,000 must be classified as a Current Expense. * Current Expenses (Deductible Now): These are repairs that restore the property to its original condition without improving it (e.g., painting, fixing a leaky roof, replacing broken floor tiles with similar ones). If the $50,000 fits this, it creates a $14,000 rental loss ($36,000 income - $50,000 expense). * Capital Expenses (Deductible Over Years): If the "basic renovations" included upgrades like new windows, a new furnace, or a kitchen remodel that increased the property's value, they are Capital Expenses. You cannot deduct the $50,000 at once. Instead, you claim a small percentage (usually 4%) annually through Capital Cost Allowance (CCA). > Crucial Rule: You cannot use CCA (depreciation) to create or increase a rental loss. If your renovations are Capital, you can only deduct enough to bring your rental income to $0; you cannot go into the "negative" to get a refund from your other income.

Click here.

Angel Ronan  SHOKUNIN Report 020226: 

Under the CRA’s 2026 guidelines, whether you receive a tax refund depends entirely on how the $50,000 renovation is classified. Even though you describe them as "basic," the CRA has a strict definition of what can be deducted immediately.

1. The "Refund" Trigger: Current vs. Capital

To get a refund this year, your $50,000 must be classified as a Current Expense.

 * Current Expenses (Deductible Now): These are repairs that restore the property to its original condition without improving it (e.g., painting, fixing a leaky roof, replacing broken floor tiles with similar ones). If the $50,000 fits this, it creates a $14,000 rental loss ($36,000 income - $50,000 expense).

 * Capital Expenses (Deductible Over Years): If the "basic renovations" included upgrades like new windows, a new furnace, or a kitchen remodel that increased the property's value, they are Capital Expenses. You cannot deduct the $50,000 at once. Instead, you claim a small percentage (usually 4%) annually through Capital Cost Allowance (CCA).

> Crucial Rule: You cannot use CCA (depreciation) to create or increase a rental loss. If your renovations are Capital, you can only deduct enough to bring your rental income to $0; you cannot go into the "negative" to get a refund from your other income.

> 

2. Impact on Your Total Tax Return

If the $50,000 is accepted as a Current Expense, your tax picture looks like this:

| Income Source | Annual Amount |

|---|---|

| Real Estate Commissions | $12,000 |

| Pension ($1,300/mo) | $15,600 |

| OAS (Standard) | ~$8,500 |

| Rental Income | -$14,000 (Loss) |

| Estimated Taxable Income | ~$22,100 |

Income Source	Annual Amount
Real Estate Commissions	$12,000
Pension ($1,300/mo)	$15,600
OAS (Standard)	~$8,500
Rental Income	-$14,000 (Loss)
Estimated Taxable Income	~$22,100

At $22,100, your income is quite low. If you had tax withheld from your real estate commissions or pension during the year, you would likely receive a significant refund.

3. The "GIS" Warning (Guaranteed Income Supplement)

There is a catch with the GIS. The CRA and Service Canada look at your Net Income to determine your GIS eligibility.

 * Income Limit: For 2026, a single senior must generally earn less than $22,488 (excluding OAS) to qualify for GIS.

 * The Trap: If your renovations are considered Capital, your income remains too high (~$63,000 before OAS), and you will likely lose your GIS entirely.

 * The Benefit: If they are Current, and your income drops to ~$22,000, you might suddenly qualify for more GIS next year.

4. Summary Table

| If Renovations are... | Can you get a refund? | Effect on GIS |

|---|---|---|

| Current Repairs | Yes. Offsets other income. | May help you keep/gain GIS. |

| Capital Improvements | Unlikely. Only offsets rental income. | Likely lose GIS due to high total income. |

If Renovations are...	Can you get a refund?	Effect on GIS
Current Repairs	Yes. Offsets other income.	May help you keep/gain GIS.
Capital Improvements	Unlikely. Only offsets rental income.	Likely lose GIS due to high total income.