CCA for heat pump

[Tim P]

I rent out 25% of my home.  I bought a new heat pump for 20K.  Do I claim 5K on CCA?

Can someone confirm the code for heat pump depreciation? 

[TurboTaxSusan]

Yes, you should pro-rate the cost of the asset if only part of it is being rented. If you are taking CCA on the whole house, then you would enter it in the same class as the house. If not, you can enter the heat pump as a Class 1 asset.

[Giorgio12]

Good Morning,

if I purchase an air source heat pump (Class 43.1/43.2) solely for a basement apartment (basement being within a primary residence) and claim CCA for such heat pump to offset the rental income, will this impact Primary Residence Exemption?

Thanks

[TurboTaxAniqua]

@Giorgio12 It’s now included in Schedule II of the Income Tax Regulations:

”equipment that is part of an air-source heat pump system that transfers heat from the outside air, including refrigerant piping, energy conversion equipment, thermal energy storage equipment, control equipment and equipment designed to enable the system to interface with other heating and cooling equipment”

Paragraph (e) of the regulation says:

Subparagraph (e)(i) requires that the system was “acquired by the taxpayer for use by the taxpayer for the purpose of gaining or producing income from a business carried on in Canada or from property situated in Canada”. Therefore if this is solely a rental property (not personal use, not for use by family at below market rent) it would qualify.

For more information we suggest to  contact CRA directly.

[Giorgio12]

Thanks, that it is helpful.

CRA allows to maintain PRE on the whole Property (including the portion for the basement apartment) under 3 conditions:

1)your rental or business use of the property is relatively small in relation to its use as your principal residence
2)you do not make any structural changes to the property to make it more suitable for rental or business purposes

3)you do not deduct any CCA on the part you are using for rental or business purposes

If I understand your response correctly, CCA can still be claimed on a heat pump while still maintaining PRE since the heat pump is considered an appliance, and not part of the Property. Is my understanding correct? Thanks

[TurboTaxVeronique]

Because it is more related to a tax question, and as my colleague specified, for more details, you should contact CRA. We are the support for the software.

You can also consult this link with all the information about CCA classes.

Thank you for choosing TurboTax.