How to report primary residence exemption, capital gains, recapture

[Tekle Carlo]

Hi,

We bought a condo townhouse (unit) in June of 2004 for 228K and lived there until Dec 2010. In Jan 2011, we rented out the place and claimed a CCA totalling 45K (2011-2019) until the unit was sold in Dec 2020 for 630K.

The FMV of the property was 315K as of Dec 2010.

How do I report the recapture of 45K, the capital gains and the the primary residence exemption of 87K on Ufile?

I spent 4 hours looking navigating Ufile but every try produced different results but the results I expected.

Thanks for your assistance.

[Nawal]

Hi @Tekle Carlo, Since you no longer lived in the residence in december 2010, it is no longer considered to be your primary residence. In 2011 there was a deemed disposition of the principal residence for which you were entitled to the capital gains exemption. The cost of the rental property then becomes fair value in January 2011. To report the disposition of the rental property in 2020, please follow the steps below:

1. On 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. On 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. On 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. For "Did you dispose of an asset in this class?" -Select Yes

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", that is, 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 sub-heading "CCA" choose the following Class of property "Land - non-depreciable property" located at the bottom of the page.

11. You must enter all relevant information.

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.

However, federal Schedule 3, as well as Quebec Schedule G if applicable, will be generated to indicate the capital gain (or loss).

[Tekle Carlo]

Hi @Nawal,

Thank you very much for the very detailed reply.

I shall try it tonight and let you know if successful.

Very much appreciated.

 

Tekle Carlo