Question

Unused Capital Cost Allowance

Forum|Forum|5 years ago
February 15, 2021
1 reply
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Hi. I sold a rental property in 2020. I will have a capital gain as a result.

I have a question regarding the unused Capital Cost that remains at the end of the sale. I have been deducting this over the years with every tax submission but there is an amount remaining.

Can I use this remaining amount to lower the amount of the capital gain?

For example assume I have a remaining CCA of $10,000 (Class 1) at the end of this year which is the last year I will report on this property.

Assume I paid $100,000 for the rental and sold it for $150,000 and I will have to claim a capital gain of $50,000 on Schedule 3. Can I use that $10,000 of the remaining CCA anywhere to reduce anything? If so where do I input it?

JohnB5677

I want to be sure I understand. Was this a Capital Loss Carryover, or was it a Passive Loss Carryover.

A capital loss is the loss incurred when a capital asset, such as an investment or real estate, decreases in value, and is sold.
Passive losses are financial losses stemming from passive activities, such as renting properties or losses from interest in limited partnerships where the investor does not play a material participant role.

If you do have a Capital loss it will offset against the sale of your rental property.

If it is an accumulated Passive loss it will not offset the sale, but all of it will be able to offset regular income.

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B

bgannon1Author

Thanks for your reply. Forgive me, but here is more info to help you (I hope)

At the end of 2019 I still owned this rental. On the form "Statement of Real-estate Rentals" on my 2019 return I had an amount of $50,000 left in column 13 in Area A - Calculation of Capital Cost Allowance (CCA) claim. This column 13 is entitled "UCC at the end of the year". This normally gets carried forward every year.

Then in January 2020 I sold the entire property.

I want to understand if I need to do anything with that remaining amount in column 13 or just leave the rental as is and show any capital gains on Schedule 3.

Hope this helps.

JohnB5677

This sounds like a passive loss carryforward. If this was your only rental property you will be able to take the complete loss for 2020.

If you report the sale in the Rental & Royalty Income (SCH E) section of the program, then those carry over losses are "usually" dealt with just fine by the program, including depreciation recapture.

Does the program automatically recover passive los... (intuit.com)

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