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We sold our rental property in 2018. The sale price is higher than the purchase price in 2012. Where do I enter the details on my tax return? Help will be highly appreciated.

Thanks,

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Hello ZDONG,

Rental income - Disposition of real estate

If you have disposed of rental property in the tax year, please follow the steps below:

1. In the "Left-side menu on the Interview tab", select "Interview setup".

2. On the screen that appears on the right, go to the "Rental income" group, check the box for "Rental property income", and click "Next" at the bottom of this page.

3. In the "Left-side menu on the Interview tab", click on "Rental Income", and on the new page that appears to the right, select "T776 - Rental income property".

4. A page will appear on your right, entitled "T776 - Rental property identification". Complete this page. You must specify the exact date of the sale of the building, which corresponds to the end of the fiscal year of this rental property, and, once the relevant information is entered, click "Next" at the bottom of this page.

5. On the "Rental property income and expenses" page will appear on your right. Remember to check the box indicating that this is the final year of operation. Subsequently, enter the income and expenses.

6. In the "Left-side menu on the Interview tab", under "Rental Income", click on "CCA". You must choose the depreciation category that corresponds to the rental property. By clicking on the category selected, a new page is generated on the right. You must complete it properly, by making sure to indicate the date of acquisition of the property, and by entering the amount in the field for "Opening balance of the undepreciated capital cost". To do so, enter the original acquisition cost, plus the capital additions made over the years, minus the total depreciation you have taken, if applicable.

7. Enter the amount for "Proceeds of disposition of an asset", meaning the proceeds from the sale of the building as well as the "ACB of the disposition", if the original value plus the capital additions minus the depreciation that you have claimed over the years.

8. In the field for "Description and amount of expenses associated with the disposition of assets", enter the expenses incurred for the sale of the building.

9. In the field for "Calculate the capital gain and carry the result on Schedule 3", choose "Calculate capital gain" from the drop-down menu. If you have a capital gain, the amount minus the expenses incurred for the sale of the building will be entered by the program on federal Schedule 3 and on Quebec Schedule G.

10. You must also enter the information regarding the land in the appropriate page, even though this provision generates no loss. However, federal Schedule 3, as well as Quebec Schedule G if applicable, will be generated to indicate the capital gain (or loss).

Do not forget to specify whether you have liquidated all the assets of this category on the line provided for that purpose, in both pages that you have completed for the property as well as for the land.

For more information regarding rental income, please consult the following CRA link:

http://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/rental-income-line-126-net-line-160-gross.html

http://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4036.html

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Thanks.  I followed the your instruction. However, When I press the Review on the top, the message was "Unable to calculate the return. Please fix the error." On the bottom half of the same page the message was: "Tax calculations completed successfully." The Tax Return tab will run forever without giving complete tax return.  I tried to delete the property sale part. It still does not work.  Maybe I should use other software?

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On 3/7/2019 at 11:40 AM, Antoine7 said:

Hello ZDONG,

Rental income - Disposition of real estate

If you have disposed of rental property in the tax year, please follow the steps below:

1. In the "Left-side menu on the Interview tab", select "Interview setup".

2. On the screen that appears on the right, go to the "Rental income" group, check the box for "Rental property income", and click "Next" at the bottom of this page.

3. In the "Left-side menu on the Interview tab", click on "Rental Income", and on the new page that appears to the right, select "T776 - Rental income property".

4. A page will appear on your right, entitled "T776 - Rental property identification". Complete this page. You must specify the exact date of the sale of the building, which corresponds to the end of the fiscal year of this rental property, and, once the relevant information is entered, click "Next" at the bottom of this page.

5. On the "Rental property income and expenses" page will appear on your right. Remember to check the box indicating that this is the final year of operation. Subsequently, enter the income and expenses.

6. In the "Left-side menu on the Interview tab", under "Rental Income", click on "CCA". You must choose the depreciation category that corresponds to the rental property. By clicking on the category selected, a new page is generated on the right. You must complete it properly, by making sure to indicate the date of acquisition of the property, and by entering the amount in the field for "Opening balance of the undepreciated capital cost". To do so, enter the original acquisition cost, plus the capital additions made over the years, minus the total depreciation you have taken, if applicable.

7. Enter the amount for "Proceeds of disposition of an asset", meaning the proceeds from the sale of the building as well as the "ACB of the disposition", if the original value plus the capital additions minus the depreciation that you have claimed over the years.

8. In the field for "Description and amount of expenses associated with the disposition of assets", enter the expenses incurred for the sale of the building.

9. In the field for "Calculate the capital gain and carry the result on Schedule 3", choose "Calculate capital gain" from the drop-down menu. If you have a capital gain, the amount minus the expenses incurred for the sale of the building will be entered by the program on federal Schedule 3 and on Quebec Schedule G.

10. You must also enter the information regarding the land in the appropriate page, even though this provision generates no loss. However, federal Schedule 3, as well as Quebec Schedule G if applicable, will be generated to indicate the capital gain (or loss).

Do not forget to specify whether you have liquidated all the assets of this category on the line provided for that purpose, in both pages that you have completed for the property as well as for the land.

For more information regarding rental income, please consult the following CRA link:

http://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/rental-income-line-126-net-line-160-gross.html

http://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4036.html

Hello,

I somewhat followed your steps except for the fact for CCA. Under the section of "Identification" it doesn't have a date of sale field o.

Under CCA Class 1 - 4% buildings with a cost exceeding $50,000.

I have never claimed CCA for the property, just the rental income.

I realize I have to claim the capital gain. How would I do that in this situation? Would I just enter it under the Capital Gains - Real Estate section?

Thank you,
Dan

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