CCA and ACB for Rental Property

[Flatlander]

Hi,  I am hoping someone can help clarify a couple questions about the CCA entries.

1st question: I am used to the paper form that asks for the "total cost" of additions to the class. For that I would include all the costs of the purchase. 

Now ufile online is asking for the "amount of capital additions" and then "the ACB of the depreciable capital property in this class"  This is the 1st year of owning the property and I am confused about what to enter in each category. Do I list only the purchase price in amount of capital additions and then add in other costs (legal fees and property transfer tax) for a ACB total?  

2nd question: The apartment came with appliances, do I need to estimate a value for the used appliances and list them in their own CCA class?  I am not planning on claiming any CCA this year, but I understand that I need to report the capital additions. 

Thanks for any help!

[Antoine7]

Hello Flatlander,

Rental income - CCA capital additions

To enter your capital additions, follow the steps below:

Please note that the land is not depreciable property. Therefore when you acquire rental property, only include the cost of the building.

Your rental property may belong to class 1, 3, 6, 31 or 32, depending on what the building is made of and the date you acquire it, please visit the link provided at the end of this document.

1- In the "Left side menu on the Interview tab", select the item "Rental income" and choose the subsection "CCA".

2. Choose the Category that corresponds to your situation, and on the page that appears on the right, go to the line "Description and amount of capital additions", in the first field, enter a brief description and enter the amount in the second field.

3- For the line "Application of half-year rule to current year additions" from the drop-down menu to your right, select "Yes".

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

5. On the line "Limit CCA or CECA for this class" 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.

Additions will appear on page 3 of federal Form T776, Parts B or C, as applicable.

For more information regarding rental income, please visit the following CRA link:

http://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-126-net-line-160-gross.html
 

[Mboga]

Is it necessary to do the CCA and ACB in the first year if I don't have a loss? Can I fill all that in the second year when I've made more money?

[Mboga]

Do I have to do CCA and ACB in my first year even though the property will have less income this year? Also if I bought the property for the land value, does that mean I have no building value to depreciate?

[TheTaxSmith]

Hello Mboga. You need to enter the ACB in the first year. However you can decide if you want to take CCA and the amount each year unless there is a rental loss before CCA. You can select for Zero CCA in the data entry area.

Make sure you you partition the ACB for land separate from the building as only the building can be claiming CCA.

Also make sure you have included all components for the ACB. Acquisition costs include costs such as legal fees, land transfer taxes, and surveys and are part of the ACB not expenses to be written off against the rental income.

[jubilee_six]

Hi there,

I have a question on how best to use CCA on my home which is also 50% rental property.  Last summer I had major landscaping work ($30,000) done to my backyard which is shared with tenants.  I've figured out the Classes.  Class 1 for the retaining walls, Class 6 for the storage shed, and Class 17 for the paving stone patio.  I am not sure how to enter this information into the forms.  Specifically:

1. To whom the CCA should be allocated.  When I select "Use of home for business purposes", I do not see any credits.  Should I select "Business level (full amounts - 100%) instead?

2. Purchase date of the property.  Is this the date I purchased my home or the date the landscaping work was completed?

3. Does this CCA information instead belong in the fields for "Description and amount of capital additions of AIIP"?

Thanks for any information you can provide.  I've been scouring the internet but I haven't found any guidance there.

[TheTaxSmith]

Hi jubilee_6. 

1. Enter 50% if you are entering expenses and additions at the full 100%. If you use 100% business enter items at 50%.

2. Use the date for the additions you made.

3. No. That is for business assets not residential rental income assets.

[ycjk]

Hi, 

I have question to use CCA for the air conditioner purchased in 2020. Can you guide me how to record in the Ufile?

Thanks!

 

[TheTaxSmith]

Hi ycjk. I believe your situation was resolved via private message communications the other day. Trust all is OK? Just want to make sure Ufile people know your question has been resolved so no further follow up is needed.

[CamD]

Hi, I own a couple rental properties that I purchased a few years ago.  I never input them as building additions for CCA purposes.  Can I add them in this year as building additions, subject to the 1/2 year rule? Or do I have to go back and re file my old returns and add them on the purchase year? Thank you!