# CCA for a washer/dryer in a rental



## claptrap (Jan 27, 2014)

I have a rental property and last year I bought a new washer and dryer for the house. I know that to claim them you have to enter them as a CCA Class 8 which is 20% if I understand the CRA website correctly. 

When I started renting out the house I did talk to an accountant and while he tried to explain CCA I don't think he did a very good job because I still don't have the firmest grasp on everything about them. About the only thing I took away from the conversation was to generally not claim them as you will have to pay taxes on them later but the conversation was more about upgrades/ repairs to the house. You can replace a few shingles or a deck board but not the entire thing.

I was wondering if someone could try to explain the pros/cons about claim the washer and dryer, if its worth it and if there would be any tax implications down the road.

Thanks!


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## Zeeshanbmerchant (Jan 4, 2014)

Not sure about what the accountant meant by taxes on them later

I'll see if i can explain CCA for you.

Capital Cost Allowance is a method of distributing the a capital item over several years as a deduction. So say you buy a car for 30,000 for your business, and a car is going to last you 10 years. Its a business expense, you need it for your business. However the government cant let you claim the entire $30k in one year. So instead the government is going to let you claim 30% of the 30,000 this year. Then it will say, 30% of the left over the next year and so on.

Similarity the government is going to let you claim 20% (Half year rule applies in the first year) of the cost of your washer and dryer every year. Except the 20% isnt going to be the original cost, but a declining balance

for example lets say you paid $1000, 

year 1 20% of 1000 = 200
year 2 20% of 800 (100-200) = 160

The reason why it would not be a good idea, is if you had elected the home as your primary residence, and as such, if you claim CCA, you will lose that primary residence. Assuming you havent done that, ofcourse you should claim CCA. Unless ofcourse i am forgetting something.


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## Guban (Jul 5, 2011)

You should claim CCA for the washer and dryer. The only time you wouldn't is if you will sell them for more than your depreciated value. Using the above example, after year two, the pair have a theoretical value of $640 (1000-200-160). If you sold them for $700, then you have a recapture of $60, that you would have to add to your income. In practice, this is not going to happen. I do note that the above calculation by Zeeshanbmerchant is incorrect in that the half year rule has been omitted, but the ideas are valid. 

Claiming CCA on your rental home as part of your principal residence is a bit of a problem as pointed out above. Claiming it on the building portion of the rental unit may be a bit of a problem too because it is quite likely that the building will be sold above the purchase cost, leading to more income included and taxed, than if you did not claim CCA.


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## claptrap (Jan 27, 2014)

Guban said:


> Claiming it on the building portion of the rental unit may be a bit of a problem too because it is quite likely that the building will be sold above the purchase cost, leading to more income included and taxed, than if you did not claim CCA.


It was 4ish years ago that I talked to the accountant but that sounds what he was talking about.

Thanks for the input.


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## Zeeshanbmerchant (Jan 4, 2014)

I didnt apply the half year rule because I thought it would lead to further confusion


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## Canadian (Sep 19, 2013)

Guban said:


> You should claim CCA for the washer and dryer. The only time you wouldn't is if you will sell them for more than your depreciated value. Using the above example, after year two, the pair have a theoretical value of $640 (1000-200-160). If you sold them for $700, then you have a recapture of $60, that you would have to add to your income. In practice, this is not going to happen. I do note that the above calculation by Zeeshanbmerchant is incorrect in that the half year rule has been omitted, but the ideas are valid.


This is correct - except for the UCC at the end of year 2 on a $1,000 appliance will be $720 [$1,000 - $100 - $180 *factor half-year rule for first year depreciation].

Recapture can also occur if you sell the appliance after your UCC on total class 8 [appliances and equipment] is depreciated to zero [**note that asset classes as a whole are depreciated for tax purposes, not individual assets]. The sale will bring your UCC to a negative balance for the year, resulting in fully-taxable recapture for the year to bring the UCC balance to zero.

Alternatively, if you sell a dryer for an amount less than the UCC balance then it will result in a fully-deductible terminal loss. Note that capital losses don't exist in the world of CCA.


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## Likingwing (Sep 28, 2020)

If my plans were to move in in a year or two. Should I still expense it? Can’t I just stop claiming CCA after I move in?


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