CCA

[MPN]

Hi - 

Can you please help with the following items in CCA section for a condo purchased as a rental property in 2022:

 

1. Opening balance of the undepreciated capital cost: Should it be left blank as it is the first year?
2. To whom the CCA should be allocated: The property is co-owned by 60%-40% with the spouse, should I choose Partner Level, (Prorated amounts)?
3. ACB of the depreciable capital property in this class: is this the grand total cost of purchase (purchase price+land transfer tax,...) or should it be just the building allocation of this grand total (land % excluded)?
4. Description and amount of capital additions (other than AIIP): As it is the first year and no capital expenses have been incurred, should I use the same value as ABC? if so, where should I put the grand total purchase price for future deposition and capital gain/loss?

Thanks

[Geo123]

Hello MPN,

 

Please see below.

 

1. Opening balance of the undepreciated capital cost - leave blank

2. To whom the CCA should be allocated: The property is co-owned by 60%-40% with the spouse, should I choose Partner Level, (Prorated amounts)?  - No leave blank

Select >> Partners (see below)

3. ACB of the depreciable capital property in this class: is this the grand total cost of purchase (purchase price+land transfer tax,...) or should it be just the building allocation of this grand total (land % excluded)? 

Create two CCA entries (1) Building  (2.)  Land (nondepreciating)

4. Description and amount of capital additions (other than AIIP): As it is the first year and no capital expenses have been incurred, should I use the same value as ABC? if so, where should I put the grand total purchase price for future deposition and capital gain/loss?

Same as ACB.  UFIle will retain the values in the software at time of disposition and you will include on Schedule 3 - Capital Gains (losses)

 

 

 

Ownership by spouse

Use this page if your spouse is a co-owner of this rental property. To use the rental property information in your file to produce a corresponding rental property statement on your spouse's tax return (adjusted by your spouse's percentage share), select Generate rental income statement for spouse below. In this case, do not repeat the information for this rental property in your spouse's file.

In some cases, such as when there are different expenses at the partner level for your spouse and yourself, the program cannot produce an accurate statement for your spouse based solely on information available in your own file. In this case, select Do not generate rental income statement for spouse. The program will use your spouse's basic identification information to complete the 'partner' identification section on your statement. However, you will need to re-enter the complete rental property information in your spouse's file.

 

 

Percentage share owned by your spouse  Generate rental income statement for spouse  Do not generate rental income statement for spouse 

 

 

 

Rental income - New acquisition of depreciable property
To enter new acquisitions of depreciable property, please follow the steps below:

1. On the "Left-side menu on the Interview tab", select the "Rental income" option, select the subsection "CCA", and on the screen to your right choose the class applicable to the new acquisition of depreciable property that you have acquired.

2. On the page pertaining to the classes of the property identify the property at the line "Description of the asset" and enter the date of acquisition.

3. For the line "To whom the CCA should be allocated", choose the option that corresponds to your situation, from the drop-down menu to your right, usually "Business level (full amounts - 100%)".

4. For the line "Description and amount of capital additions (other than AIIP): ", enter the purchase cost of the property or the market value of the property you are using for the company`.

5. For the line "Application of half-year rule to current year additions", choose "Yes".

6. If the property in question is not subject to the half-year rule, select "No".

7. However, if you wish to limit your CCA deduction for this property, go to the line "Limit to the CCA of this class" and enter the amount of depreciation you wish to claim. If you do not wish to claim a capital cost allowance, enter $ 0.00.

The cost of additions of a category already existing will be added to column 3 of Part A.

The additions will appear on page 3 of Federal Form T776, Parts B or C, as applicable.

For more information, please consult the CRA website at the following links:

https://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-12599-gross-line-12600-net.html

 

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

 

For Quebec residents, you can consult the Revenu Québec website at the following links:

https://www.revenuquebec.ca/en/citizens/income-tax-return/completing-your-income-tax-return/completing-your-income-tax-return/line-by-line-help/96-to-164-total-income/line-136/

https://www.revenuquebec.ca/en/online-services/forms-and-publications/current-details/in-100-v/

[MPN]

Geo123, thank you very much.