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2019 - sold rental - where to declare it?


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Hi,

In 2019 we sold the rental property. I was looking over the past posts on how to declare it and I am confused.

I've found 2 ways to do it, but I am not sure which one is the proper one:

1) I go to Capital gains (or losses) & ABIL and go from there (following the steps starting step 4 from http://community.ufile.ca/topic/7494-how-to-report-the-sale-of-rental-property/)

or

2) I go under Rental Income (which existed from the previous years when I declared the earnings from renting), CCA and go from there (following step 6 from http://community.ufile.ca/topic/7949-report-sale-of-rental-property/)

Thing is I get different outcomes for the 2 above. I know that only half of the profit is taxable, so I should be paying roughly 25% of the profit. One is giving me something around there and the other one is getting to a around 45% of the profit. 

I'd appreciate if possible to have a quick answer as I am looking to file it.

Thank you for your help!

Toni

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Hi Toni D, If you have disposed of rental property in the tax year, please follow the steps below:

1. In 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. In 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. In 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. 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", if 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 field information on the appropriate page. Also in the sub-heading "CCA" choose the following Classes 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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Hi Nawal,

So, you're saying I should go with the point 2). Could you, please, detail why I should not go with the first one and what is the difference between the two:

1. Under "Capital gains (or losses) and ABIL", on the page to your right, click on the plus sign "+" icon to the right of the line "Real estate, depreciable property and other properties".

2. On the page that appears, enters the relevant information in the first fields. If you are a co-owner of the residence with your spouse, go to the line "Your percentage share of capital gain/loss recorded here" enter your percentage.

3.The following line will be generated "Do you wish to transfer the remainder to your spouse's tax return (if applicable)?". Answer yes, if you want to.

4. In the "Principal Residence" section, go to "Designation of the property as a principal residence?" and answer "No" if the property that was sold was your principal residence as defined by the CRA and enter the address of the principal residence in the following fields.

Thank you!

 

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One more thing: the points 1-5 form your list, I go through them anyway, because I am declaring the Rental income. Starting point 6 I am wondering .... It looks to me like it would be more if I wanted to claim CCA during the years I was renting it. Even the name is suggesting it. I have never claimed CCA for the condo. It just looks more logical to go and declare it at the Capital gains.. that is actually.. a capital gain on the property i am selling.

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Hi Toni D, actually i'm saying you don't choose, you have to enter the information on both rental income section (to calculate the terminal loss or income based on the price of disposition, the capital cost..) and you have to enter the information under Capital gain to calculate the gain/loss on the sale for both the bulding and the land. The CCA section is also for the capital additions or dispositions you've made to the building, not only for the CCA itself. The program will add up all those informations to calculate your gain/loss on the sale.

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