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Capital Gains on Rental property


Deo Rampersaud
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Hi @Deo Rampersaud, If you have disposed of rental property in the tax year, 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).

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  • 8 months later...

Hi, I sold a rental property that I owned 50/50 with my spouse. 50% of the capital gain is being reported on both our schedule 3 and that 50% is being reported as income on line 12700. I was expecting only 25% to be reported on line 12700.

For example, capital gain is $100, split $50/$50 with my spouse and taxable at 50%, therefore only $25 should be added to line 12700 to both our returns.

How do I fix this?

Thanks

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Hey Spooner,

Looks like you need to provide a screen shot on how you filled out the form. Then its possible to point out the problem. Did you complete a single rental schedule and indicated 50% ownership with your wife? You need to provide more info as to how you completed the rental schedule.

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Hi, I have sold a condo unit rental property of mine in August 2021 and it was a rental property from Feb 2020 Until Mid June 2021.

Prior to that, it was my primary residence from 2016 to Feb 2020

I was following the steps from Nawal above but I am stuck on step 6....which class should I choose for the CCA?

What other information do I need in order to file taxes for this correctly?

Thanks.

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Hi BlazinSun,

You need to review this document for the class.

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/claiming-capital-cost-allowance/classes-depreciable-property.html

I suspect you are dealing with a Class 1 building.

That said you need to understand what the acquisition cost is and what it includes. This Adjusted Cost Base (ACB) is not always the same as the Undepreciated Capital Cost (UCC), so be careful. Also the land should be allocated separately from any depreciable assets.

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