Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: CCA class of a mobile home.
Position: Class 1, 3 or 10, depending on the circumstances.
Reasons: A mobile home can be classified as a trailer or as a building, depending on whether or not the mobile home is affixed to the land. A mobile home that qualifies as a trailer is included in class 10. Generally, a mobile home qualifies as a trailer if it has an undercarriage, an axle, wheels, a trailer hitch, brakes, emergency lights, and is not attached permanently to a foundation. If, on the other hand, a mobile home is affixed to the land, it would be treated as a building. For example, a mobile home would be considered a building if the wheels, the trailer hitch, brakes and emergency lights are removed and the unit is affixed to cement pads on the ground and services, such as hydro and water, are installed. A mobile home that qualifies as a building is included in class 1. However, if the mobile home was acquired before 1988, or before 1990 if certain grandfathering conditions were met, it falls into class 3.
November 18, 2009
XXXXXXXXXX
Dear XXXXXXXXXX :
The office of the Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your correspondence, which I received on July 13, 2009, regarding the tax depreciation of mobile homes.
You ask which class in schedule II of the Income Tax Regulations should mobile homes be included in if a taxpayer buys them to gain or produce income from a business or property. The rate of tax depreciation, which is called capital cost allowance (CCA), depends on the class in which a depreciable capital property is included.
A mobile home can be classified as a trailer or as a building, depending on whether or not the mobile home is affixed to the land. A mobile home that qualifies as a trailer is included in class 10, which has a CCA rate of 30%. Generally, a mobile home qualifies as a trailer if it has an undercarriage, an axle, wheels, a trailer hitch, brakes, emergency lights, and is not attached permanently to a foundation.
If, on the other hand, a mobile home is affixed to the land, it would be treated as a building. For example, a mobile home would be considered a building if the wheels, the trailer hitch, brakes and emergency lights are removed and the unit is affixed to cement pads on the ground and services, such as hydro and water, are installed.
A mobile home that qualifies as a building is included in class 1. However, if the mobile home was acquired before 1988, or before 1990 if certain grandfathering conditions were met, it falls into class 3. The CCA rates for classes 1 and 3 are 4% and 5%, respectively.
I am pleased to mention that as a result of legislative changes announced in the 2007 federal budget, the CCA rate for a class 1 building acquired after March 18, 2007, is increased if certain conditions are met. If at least 90% of the floor space of the building is used in Canadian manufacturing or processing activities, the CCA rate is increased by 6% to a total of 10% (4% + 6%). If, however, the building is not eligible for this additional 6% CCA rate but at least 90% of its floor space is used for a non-residential use in Canada, the CCA rate is increased by 2% to a total of 6% (4% + 2%).
I trust that the information provided clarifies the position of the Canada Revenue Agency on this matter.
Sincerely,
Jean-Pierre Blackburn, P.C., M.P.
Minister of National Revenue
André Gallant
Tel. (613) 957-8961
2009-033241
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