CCA on a rental property?

[Teh_Bandwagoner]

Got a couple questions on this:

My understanding is that you cannot artificially create a loss or a gain from depreciation i.e. I can't claim CCA if I'm reporting a loss. But does that mean on just my rental property? Or is the loss for the combined rental income and employment income.

Example:

Let's say I make $50,000 this year in income plus $15,000 from my rental ($65,000 total income), but then I record a loss on my property of $20,000 (without depreciation). So in other words a $5000 loss on my rental. Then let's say I crunch out a depreciation of $2000. Can I claim that $2000? (i.e. $50,000 - $5000 -$2000 = $43,000 net income)

Second question:
How far back can I claim for CCA? Is it just this tax year, this tax year and the year before, or as far back as I've been renting out the place, so long as I haven't claimed anything previously?

[Dan02]

I'm no tax guru, but as far as my understanding, you can only claim the loss on your property once you've realized the loss or gain ie if you've sold it or are moving back into it amoung other things.

As for the loss, it would be a capital loss and thus not eligible to offset your other income(unless it was a capital gain of some sort) but is eligible to carry forward to offset future capital gains.

As for CCA, Im sure you can refile old returns, how far back I'm not sure, if its like the disability tax credit it's 10 years.

Now someone in the know can tell me how wrong I am so I may be wiser.

Oh and i believe you can only claim CCA up to the point you're break even on the rental.

[bizaro86]

Originally Posted by Teh_Bandwagoner

Got a couple questions on this:

My understanding is that you cannot artificially create a loss or a gain from depreciation i.e. I can't claim CCA if I'm reporting a loss. But does that mean on just my rental property? Or is the loss for the combined rental income and employment income.

It is just on the rental property. If you already have a loss from your rental property you can't claim depreciation to offset your employment income. Absolutely not allowed, and they will catch it if you do it.

[Travis Munroe]

I was away for a bit so never had a chance to get to you but it looks as though the question was answered just as i would have answered it.
An accountant will give you a 100% answer with different ways around different things.

[troutman]

http://www.cra-arc.gc.ca/E/pub/tg/t4037/t4037-e.html