How much Capital cost allowance (CCA) can you claim?

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How much Capital cost allowance (CCA) can you claim?

The amount of CCA you can claim depends on the type of rental property you own and the date you acquired it.

Group the depreciable property you own into classes. A specific rate of CCA applies to each class. The main classes of depreciable rental property and the rates that apply to each class are discussed in Rental - classes of depreciable properties.

In most cases, you should use the declining balance method to calculate your CCA. This means that you claim CCA on the capital cost of the property minus the CCA , if any, you claimed in previous years. The remaining balance declines over the years as you claim CCA .

Example

Last year, Gwen bought a rental building for $60,000. On her return for last year, she claimed CCA of $1,200 on the building. This year, she bases her CCA claim on the remaining balance of $58,800 ($60,000 − $1,200).

You do not have to claim the maximum amount of CCA in any given year. You can claim any amount you like, from zero to the maximum allowed for the year. For example, if you do not have to pay income tax for the year, you may not want to claim CCA. Claiming CCA reduces the amount of CCA available to you for future years.

Note

If you are a partner of a partnership, the amount of CCA you can claim has already been determined by the partnership. If you receive a Slip T5013, Statement of Partnership Income, your CCA amount is already included in box 110 . If you are a partner of a partnership that does not need to issue this slip, the total partnership CCA will be shown on the financial statements you receive.

Limits on CCA

In the year you acquire rental property, you can usually claim CCA only on half of your net additions to a class. This is the half-year rule (also known as the 50% rule). The available for use rules may also affect the amount of CCA you can claim.

In the year you dispose of rental property, you may have to add an amount to your income as recaptured capital cost allowance or you may be able to deduct an amount from your income as a terminal loss.

If you own more than one rental property, you have to calculate your overall net income or loss for the year from all your rental properties before you can claim CCA. Include the net rental income or loss from your T5013 slip in the calculation if you are a partner. Combine the rental incomes and losses from all your properties, even if they belong to different classes. This also applies to furniture, fixtures, and appliances that you use in your rental building. You can claim CCA for these properties, the building, or both.

You cannot use CCA to create or increase a rental loss.

Example

Salvador owns three rental properties. Two of these properties are Class 1 buildings and the other is a Class 3 building. Each building has Class 8 appliances. Salvador's net rental income or loss from each one of these properties is as follows:

  • Building 1, net rental income $1,500;
  • Building 2, net rental income $2,000;
  • Building 3, net rental loss $4,000.

Salvador has an overall net rental loss of $500 ($1,500 + $2,000 - $4,000). Therefore, he cannot claim any CCA on his rental buildings or appliances, because he cannot increase his overall net rental loss by claiming CCA.

For more information about loss restrictions on rental and leasing properties, see Interpretation Bulletin IT-195, Rental Property - Capital Cost Allowance Restrictions, and Interpretation Bulletin IT-443, Leasing Property - Capital Cost Allowance Restrictions, and its Special Release.

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Date modified:
2017-01-03