Repairs and capital improvements
How repairs differ from capital improvements, with examples.
Last verified: autumn 2026
Does the work restore or improve the property?
Work that restores the property to its original condition is commonly a current expense, recorded on line 8960. Work that improves it beyond that condition, extends its life, or gives a space a new use is commonly a capital addition. That cost is recorded separately and deducted over time through capital cost allowance (CCA).
Two rules of thumb
Replacing part of an item is commonly a current expense; replacing a whole item is commonly capital. The extent of the work matters, so replacing one broken window and replacing every window may be treated differently. A large cost compared with the property’s value can also indicate a capital expense. These are general guides to review alongside the details of the work.
Worked examples
Current expense
Fixing a leaking pipe. Repainting a room. Replacing one broken window with a similar one. Patching a section of roof after a storm.
Capital addition
A full kitchen renovation. Finishing a basement that was previously unfinished. Re-roofing the whole building with a longer-lasting material. Adding a bedroom.
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Keep receipts and repair details with your rental records.
Nothing on this page is tax advice. The figures shown are worked examples, for record-keeping. Verify amounts against your records and consult a qualified tax professional.