CCA on Rental property

[whodiman]

If you claim CCA and later sell your property eventually you will need to pay recapture. So from a nominal basis there is no advantage to claim CCA. However, if you claim CCA don't sell 20 years later at which that time you pay recapture you are taking advantage of the time-value of money.

Given that is there any reason not to claim CCA? Is there something I might have missed.

[Chandler_Racing]

Assuming the sale of the property is capital in nature, the gain would be only subject to 50% at your marginal tax rate.

Recapture is in essence considered business income which would be subject to 100% taxation of the gain at your marginal tax rate.

Also, CCA can not be used to create a loss for tax purposes. My advice would be not to do it, but you might want to ask a personal tax specialist, I work in Corporate Tax so not really my area of expertise :poosie:

[KappaSigma]

Typically for clients we do not take CCA for rental properties. Not worth it in the end.

[whodiman]

Originally posted by KappaSigma
Typically for clients we do not take CCA for rental properties. Not worth it in the end.

Can you quickly elaborate on why it's not worth it?

[superflychief]

We sold my wife's house, which she was renting, for less then it was worth since it appraised higher during the boom when we started renting it. This created a terminal loss and counted against her income reducing her taxable income.