# CCA on car? ( Capital Cost Allowance )



## Jungle (Feb 17, 2010)

What are the advantages and disadvantages of claiming CCA on your car used for a rental property? 

..Or can you even claim this? Also, I read on MDJ, that if you claim CCA, you must recapture it later on. What exactly does that mean? 

http://www.milliondollarjourney.com/rental-property-income-taxes-and-deductions.htm


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## Plugging Along (Jan 3, 2011)

I think it meant CCA on the rental not on the car. Usually, if you're claiming your car, it's milage, unless you're using it for 90% (or some high number) for the rental only.

If you claim CCA on the rental, you add this depreciation back into calculation when you sell it.


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## Jungle (Feb 17, 2010)

Ok thank you. 

So if you sell the rental and have to add the depreciation back on the sale, what is the point of claiming CCA?


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## Plugging Along (Jan 3, 2011)

That'a a very good question. It's been a topic of discussion in our family for years.

Here's how our accountant explained it (in my words)

If your in a low income bracket, then don't take CCA, because when you sell it then the year you sell it you will be in a high income bracket because of the gains.

If you are in a high income bracket and plan to hold on the property for 10+ more years (might be 7 or 8 can't remember), then it makes sense to take it, as you get the tax write off now, and you'll be in the same tax brackett as later, but you get the benefit of the present value of the savings.

Never take CCA on a place that was your PR at one point

There were also a few other considerations, such as if in a year you need to take the CCA because of cash flow, and don't have the money for the additional taxes, but that goes against the first low income bracket comment. 

Also, the number of properties you have may make a difference too.


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