Please help fill out CCA for Rental Property

[NFLSurvivor]

Hello, this is my first year claiming CCA for our rental properties and I am having trouble figuring out what to put in these UFile Fields. I have done some preliminary research on CRA website, Google searches including watching video tutorials where applicable but I would appreciate it, if anyone can tell me what to put in the fields in the screenshot below.

Some of the fields is self-explanatory (Purchase date of the property) while others are a bit tougher for me to figure out what it means exactly e.g. Opening balance of the underpreciated capital cost and ACB of of the depreciable capital property in this class. 

Thank you kindly!

[url=https://ibb.co/5kGryhV][img]https://i.ibb.co/T1Y4SM5/CCA.jpg[/img][/url]

[NFLSurvivor]

Sorry let's see if the screenshot shows up properly this time

 

https://ibb.co/5kGryhV

[TheTaxSmith]

Hi there. Try looking at this to understand about capital properties and rental income as well as Capital Cost Allowance. If you can provide more specific numbers it would be relatively easy to help you allocate amounts to the proper areas. How does that sound? Read this first  https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/capital-cost-allowance-rental-property.html

 

[NFLSurvivor]

Thank you very much. I did read through the guide but I am still very confused what to put in for the UFile filed *Opening balance of the undepreciated capital cost.

Do I skip it because this is my first year claiming the CCA? Or do I put in the value of the building (say $300K) or do I put in the CCA value ($300,000 x 4% CCA x 50% rate allowed for first year = $6,000)?

What about other UFile fields like *ACB of the depreciable capital property in this class* or *Limit to the CCA of this class*? Can I simply leave them blank and UFile will do the automatic calculations?

[TheTaxSmith]

You can also search the community site for posts concerning CCA, ACB, etc. That said if this is the first year you are claiming rental income you will leave the Opening Balance area blank. Next you will enter the purchase cost of the building as an Acquisition. The acquisition amount is the ACB, and you must be careful in how you determine that. You purchased land and a building but only the building portion can be used for a CCA claim. Also any costs for a survey, legal fees, appraisals, inspections, municipal transfer taxes must be allocated proportionally to the land and building cost to determine the correct ACB. Those costs are not rental expenses. From there you let the software determine the CCA to be claimed. If it's the first year the CCA will be half. Now if you have claimed rental income in prior years you will enter that ACB amount you determined, as mentioned above, in the Opening Balance area and let the program determine the rest. The Land ACB will not be subject to a CCA claim and you need to enter it in a Land category and make sure you keep a record of how it's ACB was determined.

[Rentalman]

I have similar questions to NFLSurvivor and have also read through the CRA guide. My wife and I bought a rental house in 2021. Lets say $500,000. Lets say I call this 80% building, 20% land. I paid $10,000 in land transfer/lawyer fees.  Before renting it out (ie during the Renovation Period), I completed $30,000 in renovations.  How do I fill out CCA? I add a Class 1, leave the opening balance blank, since bought with my wife I select "Partner Level" for whom should the CCA be allocated, enter date of purchase, then what do I put for the rest of the fields?

[BLSM]

Rentalman, check to see if any of the renos can be used as 'current expenses', as opposed to 'capital expenses'.  If so, you can write them off against the rent you collected last year.

The ACB will include the cost of the building and the share of the applicable fees.

Depending where you live, I'd hesitate to say that land was only 20% of the value.  How does your local tax authority break it down?

As TaxSmith said, be sure to write out your calculations and how you determined the breakdown.  You never know how long it will be before you need to justify those numbers, and as an ex-landlord of several units, I know I tended to forget over time.  Even now, with our one commercial rental, I forget the when and why of things.

[Rentalman]

I have other current expenses that I am counting, but it makes sense to include some that took place during the Renovation Period differently. (When I spoke to the CRA the other day, they said renos made prior to renting it out in order to get it ready to rent, those can be added as a cost of the purchase of the house). So say I spent $500,000 on the purchase, and lets call it 80% for building (agreed, likely its not that -see below) so thats $400,000, then I would add the $30,000 in expense to get it ready to rent. Then that $430,000 gets entered somehow in Ufile but I am not sure where to put all those things.

I wasn't sure how to determine the breakdown between land/building. I am in Kitchener/Waterloo in Ontario and would think the land is a higher proportion. I looked at the MPAC assessment but it doesn't show a breakdown of the land/building for the assessment.

Yes, I keep very detailed records but am still looking for help on how to enter the Reno Period expenses and for the first year (these are the receipts I will need to keep until I sell the house and will want great notes on it).

Another question - What is the accelerated investment Incentive and does it apply to my rental property?

[Werty]

I have similar questions too. The CRA guide does give me a bit information but doesn't answer my questions. How do you depreciate window blinds? Say purchase price of a rental property is $300,000 and 20% land, 80% building.  Class 1, 4%, so $4800 is what I can depreciate for the first time? 

[Rentalman]

I ended up calling the CRA to ask them some of these questions (1-800-959-8281 then 4, 5). I got most of my questions answered, but I still haven't really figured out where to input some things into the Ufile software. Right now I am just trying to play with entering in different areas of the CCA section and see what comes out in the Tax Return tab under the T776 section. 

Window blinds - likely counts as furniture which is a Class 8 CCA if you bought them after the house purchase. If you got them with the house purchase, they would just depreciate along with the house you bought under a Class 1 CCA on the building itself.

CRA also advised that I should get an evaluator come and do an appraisal on the property to determine whether the 80% building/20% land is appropriate or not.

[Rentalman]

This was a useful link I found https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4036/t4036-20e.pdf

[Werty]

What will happen if you file 80% building/20 % land but the correct percentage should be 60% building/40% land? 

[Rentalman]

It sounded like the CRA doesn't have a method of determining it themselves and said you should use a professional property advisor. One of the other CRA guys I talked to a bit earlier didn't know, but said he heard some people use the property tax documents that give an assessment. Mine didn't have it broken down that way unfortunately though.

[G-Hiotis]

I made a Youtube video on CCA and Rental Properties that might help. You can view the video here (Note: I work for UFile): 

 

[BLSM]

I'm in BC, and fortunately, our property assessment office does break down land and buildings.  Even if yours doesn't, perhaps you can call them and ask.  They must have a breakdown in their records, in order to know when to increase it.  After all, the house likely depreciates, while the land appreciates.

What kind of blinds are they?  If they are the vinyl ones that tenants always break, they are really not a capital expenditure.  They have too short a life span.

[Pia]

Hello, we (my husband and I) purchased a rental property in June 2020 which we extensively renovated and started renting it in February 2021. I understand that I can only claim CCA for the building (not land) and legal expenses pertaining to the purchase of the building (not land). I claimed our purchase of the building and capital renovation expenses (Class 1) and appliances (Class 8). I am not sure that I entered the information correctly as I do not see any carry forward amounts for the CAA. 

As this is our first year, what fields should we be completing when it comes to the CAA? As per other posts, you do not enter anything for opening balance of UCC; rather you enter the amount in ACB? Other than purchase date, do we need to complete any other fields?

Thank you.

 

[TheTaxSmith]

Review the return under the View situation and look at the specific CCAschedule for the rental property. Does the last box under UCC have an entry/number?. That will be carried to your return for 2022. If there is a number there then you have accomplished the data entry required. Of course you need to review the number and understand the calculations to be assured it is correct.

[CHAKRAVARTYD]

Hi on the CCA topic, I have a few questions.

1) How do i fill the CCA forms in UFile for an apartment? Like how do i determine the Land + building cost since I cannot deduct the Land cost. I purchased this apartment in Oct 2019 and this is my first year I want to claim the CCA.

2) What amount shall I fill in the "Opening balance of the undepreciated Capital Cost"

3) What amount shall I fill in the "ACB of the depreciable capital property for this class"?

[Geo123]

Hello CHAKRAVARTYD,

How to complete CCA is found in the above YT link ' https://youtu.be/NzNz8YztUgU

1) How do i fill the CCA forms in UFile for an apartment? Like how do i determine the Land + building cost since I cannot deduct the Land cost. I purchased this apartment in Oct 2019 and this is my first year I want to claim the CCA.

>>You can get an appraisal or consult your municipal tax bill (if they break it out)

2) What amount shall I fill in the "Opening balance of the undepreciated Capital Cost"

>>The opening UCC based on the above appraisal

3) What amount shall I fill in the "ACB of the depreciable capital property for this class"?

>>Based on the above appraisal

[Clayton]

Hello,

I have bought a rental with my spouse 50/50.

The house value is 350,000 the land value is 150,000. Do I place these numbers on both of our T776 forms in the CCA columns as I am doing it... Or do I use only 50% of these amounts on each of our respective T776 CCA calculation columns. ( I plan on depreciating the rental, my spouse will not be depreciating)

[Geo123]

Hello Clayton,

Normally you enter the T776 and CCA in only one file and split the amounts with a partner eg. Spouse 50% and UFile will generate the T776 for both Family Head and Spouse.  You can achieve what you are trying to do by limiting the CCA.  If you still wish to have the Spouse not claim any CCA you will have to manually enter each T776 for the Family Head and Spouse (and making the desired split eg. 50%).

[Property_guy]

Hi, my wife and I  bought our 2nd rental property in early 2022, 

 

question1- my question is should I add the capital cost to the T776  of the older property or add a new form for the new property, 

Question 2 - Should we answer yes to EPOP ( mainly for the new capital addition we may be eligible for a higher CCA)

Question 3- If we bought some furniture for making the house rentable, is it a capital cost or soft expense?

 

Thanks for your help

[Geo123]

Hello Property_guy,

question1- my question is should I add the capital cost to the T776  of the older property or add a new form for the new property, 

>>A new and separate T776 

Question 2 - Should we answer yes to EPOP ( mainly for the new capital addition we may be eligible for a higher CCA)

>>You should consult with an accountant or tax advsior

Question 3- If we bought some furniture for making the house rentable, is it a capital cost or soft expense?

>>Please consult this link to decide on Current expenses or capital expenses

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/current-expenses-capital-expenses.html

[Property_guy]

On 4/4/2023 at 6:44 PM, Property_guy said:

Hi, my wife and I  bought our 2nd rental property in early 2022, 

 

question1- my question is should I add the capital cost to the T776  of the older property or add a new form for the new property, 

Question 2 - Should we answer yes to EPOP ( mainly for the new capital addition we may be eligible for a higher CCA)

Question 3- If we bought some furniture for making the house rentable, is it a capital cost or soft expense?

 

Thanks for your help

Thanks for the response, I have an issue with Ufile setting up land value in section F, when I add form for land and add the value, Ufile does not add that value to section F, anyone with same issue, any suggestion is appreciated. 

[Geo123]

Hello Property_guy,

To make an addition to the Land component :

Land - non depreciable property

Enter the capital cost allowance information for this asset.

Description of the asset: My Rental land

 Opening balance of the undepreciated capital cost $50,000.00
 Purchase date of the property 01-01-2019
 ACB of the capital property in this class $50,000.00
 
Description and amount of capital additions: Land_Addition_2023   $10,000.00QC
 

T776 - Area F

Area F – Land additions and dispositions in the year
Total cost of all land additions in the year  [9923]   [  $10,000]
Total proceeds from all land dispositions in the year
Note : You cannot claim capital cost allowance on land. For more information, see Chapter 4 of Guide T4036.

 

[Frustrated User]

Regarding rental income (CCA) and form T776.  I have a Class 8 item to claim in Area A.  Area A of CCA does not complete the calculation.  Column 17 (%) does not multiply by Column 16 (base amount).  When calculating properly it should enter in to Column 18 and subsequently enter in to Line 9936.  I did have an amount in Column 18 but it was the wrong amount previously and it did not transfer to Line 9936.  Now that I have the correct amounts in 16 and 17, it won't calculate at all.    I see many complaints stating that Column 18 does not transfer to Line 9936 but have not seen a resolution.

So I have two issues.  Area A is not calculating and Column 18 won't carry over to Line 9936.    Can anyone give me advice?

Ufile questions regarding CCA do not seem to match the Columns on the form or I'm not understanding them.

[SJD]

Hello Frustrated User,  I have the same problem :  Column 18 does not transfer to line 9936.  Ufile still has this same problem now in 2024!   Have you found a way to solve it yet?