Subject: Question About Mortgage Prepayment Fees in Canada
Hello everyone,
I’m reaching out to see if any accountants in Canada can assist me with a question. I need to know if the fee my bank charged for closing my mortgage early can be deducted after selling my rental apartment.
Is this fee eligible for deduction on line 8710, or is it more appropriate to consider it a capital gain deduction that can be subtracted from the proceeds of disposition?
I appreciate any guidance you can provide!
Thank you!
One response
Hi there,
When it comes to the fees associated with early mortgage repayment in Canada, the treatment can vary based on your specific situation. Generally speaking, if you incurred a fee to pay off your mortgage early in relation to a rental property, the fee might not be directly deductible as an expense on your tax return.
Line 8710: This line is typically used for deductions related to the cost of sale of the property, such as real estate commissions or legal fees. However, mortgage penalties or fees for early repayment are generally not included here.
Capital Gains Consideration: The fee may indeed be more relevant to your capital gains calculation. When you sell a rental property, you can deduct costs that are directly related to the sale from your proceeds of disposition, which can help reduce the capital gain. If the early repayment fee can be directly associated with the sale, it may be considered in that context.
To get the most accurate advice tailored to your specific situation, I recommend consulting with a professional accountant who can provide guidance based on current tax laws and your circumstances.
Hope this helps, and best of luck with your sale!
Best,
[Your Name]