Hi Tara,
Thank you for the detailed explanation.
Based on your statement "Now we need to know the original CCA you assigned at time of purchase for the class 1 building- this is the value you will enter as the DISPOSITION $ for class 1 to recapture the CCA depreciation and clear out Class 1 in the CCA for the property", I have now a strong sense that I am in the right direction.
I thought in the begiining that the DISPOSITION $ refers to the property sale price. So when I enter the sale price in the Proceeds of dispostion in T776, my recapture CCA is way too high and does not match what I have claimed in the prior years.
Example (numbers are just random examples):
2008 Condo property purchase price: 337,000
Original CCA: 337,000
Over several years I claimed (aka used) CCAs which totaled to 39,000.
In short, my UCC at start of year (for 2021) is 298,000
2021: Sold condo at 538,000
So in T776, my entries (in the beginning) were like:
UCC at start of year 2021: 298,000
Proceeds of disposition : 538,000 (sale price)
CCA recapture: 240,000 (whoa!!!), this is definitely not correct as I only claimed a total of 39,000 for CCA in the past several years.
From my understanding of what you have explained and from my other readings, I believe this is how it should be:
UCC at start of year 2021: 298,000
Proceeds of disposition : 337,000 (enter the original CCA you assigned at time of purchase, a.k.a. the original capital cost. In the Area E - Column 3, it also provides a clue: the amount of proceeds of dispostion "should not be more than the capital cost". So defnitely I should not enter the sale price of 538,000).
And therefore the CCA recapture is: 39,000 (Bulls eye !!!). And this CLEAR out (zero out) my CCA balance at the end of the year 2021.
And from my estimation when I completed my tax just now, my owing tax is just about the reasonable range.
Thanks again for your input. Cheers!
