Capital expenses

[PeteH]

Hello,

This was asked prior but was hoping to get more concrete responses. 

For capital expenses on a rental property, can I simply keep a record of all the capital expenses over the years and then take the total lump sum deduction when I dispose the property in the future? Or should I be adding the capital expenses on the year it occurs to the CCA pool on the property and then slowly depreciate the CCA balance over the years?

CCA is a tax payer elect expense, so I can choose to add or not add the capital expenses to the corresponding tax year. So then my question becomes, if I choose not to include the capital expenses into CCA in the year I incur them, can I just deduct them all together in the future year that I dispose the rental property? 

Thanks in advance for any clarification.

[Geo123]

Hello PeteH,

CCA must be claimed annually (if you choose to take the deduction).

Claiming capital cost allowance (CCA)

You might acquire a depreciable property, such as a building, furniture, or equipment, to use in your business or professional activities.

Since these properties may wear out or become obsolete over time, you can deduct their cost over a period of several years. This yearly deduction is called a capital cost allowance (CCA).

You cannot deduct the full cost of depreciable property when you calculate your net business or professional income for the year in which you acquired the property.

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

[PeteH]

1 hour ago, Geo123 said:

Hello PeteH,

CCA must be claimed annually (if you choose to take the deduction).

Claiming capital cost allowance (CCA)

You might acquire a depreciable property, such as a building, furniture, or equipment, to use in your business or professional activities.

Since these properties may wear out or become obsolete over time, you can deduct their cost over a period of several years. This yearly deduction is called a capital cost allowance (CCA).

You cannot deduct the full cost of depreciable property when you calculate your net business or professional income for the year in which you acquired the property.

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

Hello Geo123, 

I understand that one cannot deduct the full capital expenses in the year it is acquired, but this is not what I am asking..

I am simply asking if I can elect to have my incurred capital expenses be deducted at disposition (ie. in a future year) and NOT to be claimed as CCA (as I choose not to claim it)? 

Thanks again, 

[Geo123]

Hello PeteH,

Yes, you can add the capital expenses as they are incurred annually and not claim the CCA deduction (Limit CCA = 0) OR you can claim all the capital additions at the time of disposition.