☰
✕
Sign In

Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
New Member
posted Feb 24, 2020 12:04:10 PM

Rental property Capital Expenses - Percentage of area change

Last year We were renting out 50% of our house. This year we have changed to renting out 25% of the house. Will the capital expenses I carried forward from last year still use the 50% square footage rate or will it all (last and current year expenses) be calculated on the new square footage rate...25%?

0 1 471
1 Replies
Level 15
Mar 6, 2020 5:25:54 PM

If your carry forward your information in TurboTax, the Undepreciated Capital Cost (UCC) amounts are going to reflect the 50%.

 

Assuming you are claiming Class 1 CCA , there is no need to adjust the UCC amounts that have carried forward, instead you will need to claim a Deemed Disposition of 50% of the Rental Portion of the house. 

 

  • Assuming the house has not appreciated in value tremendously, a fairly accurate way to do this would be claiming 50% of the starting cost you entered in Class 1 as the Deemed Disposition. 
  • If the house has appreciated in value since the time you started claiming Class 1 CCA, you should determine the Fair Market Value (FMV) of the entire house and claim 25% as the Deemed disposition. 

Here's some more information on disposing of property you might find helpful: TurboTax Tips