Column 6 - Adjustment for current-year additions

In the year you acquire or make additions to a rental property, you can usually claim capital cost allowance (CCA) only on half of your net additions (the amount in Column 3 - Cost of additions in the year minus the amount in Column 4 - Proceeds of dispositions in the year). We call this the half-year rule.

Calculate your CCA claim only on the net adjusted amount. Do not reduce the cost of the additions in Column 3, or the CCA rate in Column 8 - Rate (%). For example, if you acquired a rental property for $30,000, you would base your CCA claim on $15,000 ($30,000 × 50%) in the year you acquired the property.

If you acquired and disposed of depreciable rental property of the same class in the current tax year, the calculation in Column 6 restricts your CCA claim.

Calculate the CCA you can claim as follows:

• Determine which of the following amounts is less:
  • the proceeds of disposition of your rental property minus any related costs or expenses; or
  • the capital cost.
• Subtract the above amount from the capital cost of your addition;
• In Column 6, enter 50% of the result. If the result is negative, enter "0".

In some cases, you do not make an adjustment in Column 6. For example, you may have bought rental property in a non-arm's length transaction and, until you bought it, the seller continuously owned the property for at least 364 days before the end of the current year.

Also, some properties are not subject to the half-year rule. Some examples are those in Class 13 , Class 34, Class 52 as well as some in Class 12 , such as small tools.

The half-year rule does not apply when the available-for-use rule denies a CCA claim until the second year after you acquired a rental property.

Forms and publications

• Guide T4036, Rental Income
• Form T776, Statement of Real Estate Rentals
• Interpretation Bulletin IT-285, Capital Cost Allowance - General Comments

Related Topics

• Rental - classes of depreciable properties
• Column 3 - Cost of additions in the year
• Column 4 - Proceeds of dispositions in the year
• Column 8 - Rate (%)

Date modified:

2016-01-05