Hello All!!
I'll try to be as detailed as possible, without getting too long winded.
I have two rental properties in 2 different cities than my primary residence. I am in trades (electrician) so maintain/repair all properties on my own. I sold my 2017 Pickup (Class 10) and bought a new 2019 Pickup (Class 10). The problem I have is Turbo Tax is calculating this incorrectly, its showing a loss of $45000+ on the one property. I've tried playing around with software but cannot seem to find a method to get to show up as a depreciable Class 10 item.
Can anybody help me out here? Thanks very much in advance!
Brian
Hello Brian,
I hope this reply answers some of your questions and provides some clarity in reporting these business related events for tax purposes in TurboTax.
It can be complicated reporting the vehicle in 3 different areas: Rental 1, Rental 2, Self-Employment. What is central for all three declarations would be to ensure that you report the mileage for each endeavor individually, as this prorates the vehicle expenses for each enterprise. Each vehicle expense is reported in complete on each of the three enterprises, i.e Fuel, Insurance, ... and CCA. The mileage of business use to total mileage would prorate these expenses.
In Turbo Tax Online, your rental income would be reported on two separate entries, like two separate T776 Rental Income Statements, and your business under self-employment, a T2125 Statement of Business or Professional Activities. To report the vehicle acquired and the other disposed would be two separate entry items reported in each of the rental income statements and your self-employment declaration, 6 entries in total. As there continues to have a vehicle in class 10 you would not claim that the sold vehicle is the only vehicle in class 10 (last check box at the bottom of the vehicle expense statement), as this would create either a terminal allowance claim or a recaptured capital cost allowance. What happens to the pool of assets in class 10 is that your Unused Capital Cost (“UCC”) will increase by the value of the newly acquired vehicle and be reduced by the proceeds of the sale of that vehicle. Note, it is possible for the proceeds from the car sale to exceed the value in the CCA class pool, in which case there would be no CCA going forward, the unused capital cost allowance (UCC) at the end of the year would be zero, and the difference would be included in income as recaptured capital cost allowance. Please note, you have a maximum CCA that you can claim in a year but you may choose to reduce or not claim that full amount.
For reference please review the vehicle expenses in the CRA guide T4002 on business & professional income: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4002/t4002-5.html#tocch3d
Hello Brian, Are you working with TurboTax Online (Self-Employed) or the Desktop edition (Home and Business)?
Hello Brian,
I hope this reply answers some of your questions and provides some clarity in reporting these business related events for tax purposes in TurboTax.
It can be complicated reporting the vehicle in 3 different areas: Rental 1, Rental 2, Self-Employment. What is central for all three declarations would be to ensure that you report the mileage for each endeavor individually, as this prorates the vehicle expenses for each enterprise. Each vehicle expense is reported in complete on each of the three enterprises, i.e Fuel, Insurance, ... and CCA. The mileage of business use to total mileage would prorate these expenses.
In Turbo Tax Online, your rental income would be reported on two separate entries, like two separate T776 Rental Income Statements, and your business under self-employment, a T2125 Statement of Business or Professional Activities. To report the vehicle acquired and the other disposed would be two separate entry items reported in each of the rental income statements and your self-employment declaration, 6 entries in total. As there continues to have a vehicle in class 10 you would not claim that the sold vehicle is the only vehicle in class 10 (last check box at the bottom of the vehicle expense statement), as this would create either a terminal allowance claim or a recaptured capital cost allowance. What happens to the pool of assets in class 10 is that your Unused Capital Cost (“UCC”) will increase by the value of the newly acquired vehicle and be reduced by the proceeds of the sale of that vehicle. Note, it is possible for the proceeds from the car sale to exceed the value in the CCA class pool, in which case there would be no CCA going forward, the unused capital cost allowance (UCC) at the end of the year would be zero, and the difference would be included in income as recaptured capital cost allowance. Please note, you have a maximum CCA that you can claim in a year but you may choose to reduce or not claim that full amount.
For reference please review the vehicle expenses in the CRA guide T4002 on business & professional income: https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4002/t4002-5.html#tocch3d