# Rental Disposition, CCA , RRSP and Capital Gains - HELP!!



## Linebacker (Feb 28, 2014)

Hi folks. Hoping someone can shed some light on my situation...I'm including approximate amounts to present a clear pic of my situation...I purchased a rental 12 years ago, sold it in 2013. Did NOT claim any CCA while I owned it. The difference between the purchase and sale amount is +100 K. I contributed a large amount to RRSP this year (50 K), in the hopes of offsetting the capital gains I would have to pay. Right now, the RRSP didn't work the way it was planned. So, here are the questions:

1. Can I claim CCA in the year of disposition (selling the apt?)
2. If I can claim CCA, CRA states that not all CCA needs to be claimed in the current year. I interpret that to mean I can carry forward any CCA amount.
3. As a result, can I go back and calculate the CCA for the past 12 years and claim it in 2013? 

Hopefully someone out there can provide some direction or a link with the relevant info...I searched with no luck!

Thanks!


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## stardancer (Apr 26, 2009)

Linebacker said:


> Hi folks. Hoping someone can shed some light on my situation...I'm including approximate amounts to present a clear pic of my situation...I purchased a rental 12 years ago, sold it in 2013. Did NOT claim any CCA while I owned it. The difference between the purchase and sale amount is +100 K. I contributed a large amount to RRSP this year (50 K), in the hopes of offsetting the capital gains I would have to pay. Right now, the RRSP didn't work the way it was planned. So, here are the questions:
> 
> 1. Can I claim CCA in the year of disposition (selling the apt?)
> 
> ...


http://recherche-search.gc.ca/rGs/s...a&st=s&num=10&st1rt=0&gcwu-srch-submit=Search


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## Taraz (Nov 24, 2013)

Claiming CCA would also increase the amount that you pay capital gains tax on, if I understand correctly. For example, if you had depreciated the rental 5K a year for 5 years, you would then have to pay taxes on $125k instead of $100k, as you have claimed that the value decreased by $25k. (CCA is helpful to offset your rental income if your house goes down in value while you're renting it, however.)

Capital gains tax is the lowest tax (vs. regular income, interest, dividends), so I'd probably just pay it if I were you. 

If you held your rentals in a corporation, you could look into the Lifetime Capital Gains Exemption, but I'm betting you didn't. http://www.cra-arc.gc.ca/gncy/bdgt/2013/qa05-eng.html


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## AMABILE (Apr 3, 2009)

don't you have "*capital expenses*" to claim to reduce your capital gains ?


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## Linebacker (Feb 28, 2014)

*aldsem swigean*



AMABILE said:


> don't you have "*capital expenses*" to claim to reduce your capital gains ?


yes I do (repair expenses maintenance expenses and disposition fees) but I was hoping there was a way to reduce the taxes on the capital gains. In hindsight, I should have split the rental income and expenses between myself and my spouse, reducing the capital gains tax...


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## balexis (Apr 4, 2009)

Indeed, capital expenses are added to the base costs, offsetting the capital gain at time of disposition.


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## OptsyEagle (Nov 29, 2009)

There is no value in claiming CCA after it is sold. To be clear, the only major negative of claiming CCA is when you sell so I doubt I would recommend going back to claim it unless there is a huge difference in tax brackets, etc. Even then, since you are probably in the highest bracket this year, I doubt it would help.

A $50,000 RRSP contribution will offset the tax on a $100,000 capital gain, in it's entirety, so I don't understand why you say "the RRSP didn't work the way it was planned". Sounds like a perfectly calculated plan to me.


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## Taraz (Nov 24, 2013)

Do you have any stocks that lost money? I believe you can sell them and use them to offset the previous year's capital gains. (Though you should consult an accountant to be sure.)


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## Eclectic12 (Oct 20, 2010)

OptsyEagle said:


> ... A $50,000 RRSP contribution will offset the tax on a $100,000 capital gain, in it's entirety, so I don't understand why you say "the RRSP didn't work the way it was planned". Sounds like a perfectly calculated plan to me.


For the $50K RRSP contribution - I guess it depends on how far beyond the $100K mark the "+" of the OP's "100K +".
Then too - maybe the rental capital gain and the RRSP contribution basically balance out but the OP has other income that was overlooked.


Lots of possibilities but when the focus is strictly the rental capital gain plus the RRSP contribution - a good chunk, if not all has been taken care of.


Cheers


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## Eclectic12 (Oct 20, 2010)

Taraz said:


> Do you have any stocks that lost money?
> I believe you can sell them and use them to offset the previous year's capital gains. (Though you should consult an accountant to be sure.)


No need for the accountant ... selling capital property, including stocks for a loss has to be applied to the current tax year capital gains but if the net situation is a loss, the loss can be carried back three years.

http://www.taxtips.ca/filing/capitallosses.htm
http://canadianmoneyforum.com/showt...Losses-to-Offset-Previous-Years-Capital-Gains


Or one can check out a tax or investing book in the library, lots of them have good chapters. Or a call to CRA will confirm this.

Cheers


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## Linebacker (Feb 28, 2014)

It seems that this situation is the best I can hope for...the RRSP contribution did reduce the taxes, but not completely (a small balance is owed) ...I was hoping I was missing something (CCA?) that would actually give me an income tax refund for a change...FYI...for future land lords selling their apartments...have enough RRSP room to make a contribution to offset the capital gains...after reading all the responses, it seems this was the best I could do.


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## Eclectic12 (Oct 20, 2010)

Even if you do have to pay, I'm not sure I'd be too worried about it. You are paying a low taxes as only 50% of the capital gain is being included as taxable income. 

The same amount paid as income would be 100% taxable at likely a higher tax rate.


Cheers


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## dbw (Dec 8, 2011)

Taraz said:


> Capital gains tax is *the lowest tax*


If Capital gains is the lowest tax, then doesn't it make sense to claim CCA up front every year to off-set with the rental income? is the taxes on rental income higher than capital gain?

Sorry to hijack this thread but I'm new to rental income and have some questions myself.


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## davidjean (Mar 27, 2014)

dbw said:


> If Capital gains is the lowest tax, then doesn't it make sense to claim CCA up front every year to off-set with the rental income? is the taxes on rental income higher than capital gain?
> 
> Sorry to hijack this thread but I'm new to rental income and have some questions myself.



Saving on taxes this year to pay more in taxes in the future just doesn't make sense to me. Maybe I'm an optimist, but I plan on making more money in the future. So saving taxes due to a CCA claim this year will just cost you more money in the future.


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