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We sold rental property in 2016, I checked "I sold rental properties, lands or buildings". Do I need to check Equipment and building disposition too?
The software calculates the Capital Gain but I do not understand how to remove/reduce the CCA claimed over the years we have had the property.
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Investors and rental owners
When disposing of Rental Property (Investment) there are a number of steps to correctly report the transaction to Canada Revenue.
You will need to access the rental schedule under the "Income" tab > "Rental Property" providing details of the address for the property and ownership type. Also include the date that the property was sold.
Then continue to the "Rental Profile" you will complete the sections as in previous years for income and expenses. Included in the year of sale will be information for "Bought/Sold Equipment, property, buildings or land", (this will only be relevant if you have claimed or set up CCA amounts in prior years and have remaining UCC balances to clear. If you have not claimed CCA in prior years or have opening UCC then this section is not required. (This is very important and requires review of prior years tax returns.)
The second area of the tax return that requires reporting of this disposition is for Capital Gains/Losses. Find this screen under "Income" > "Investments" > "Capital Gains and...", place a check mark in the first box "Sold stocks, bonds, real estate,..." and continue.
In the Capital Gains screen you will indicate the type of investment sold as "Real Estate/depreciable property" and then input the required information for your transaction.
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Investors and rental owners
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Investors and rental owners
The bigger issue would be with any Class 1 asset and prior CCA taken. This may result in Recapture and income reported on the T776 from the sale.
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Investors and rental owners
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Investors and rental owners
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It should be noted that on the T776 the UCC, Proceeds, will need to be reported individually on each co-owners rental schedule.
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Investors and rental owners
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The proceeds in the T776 deals only with recapture or terminal loss based on the difference between the original ACB and existing UCC balances.