Rental Property CCA election between Canada and US

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SHSHSH
Posts: 10
Joined: Thu Apr 16, 2020 4:01 am

Rental Property CCA election between Canada and US

Post by SHSHSH » Sat May 02, 2020 4:27 pm

Hello,

Hoping I can get some help here to understand the CCA/depreciation rules.

Situation:
- Canadian Citizen working in US since June 2019
- Personal use property converted to Rental use in June 2019 as well.
- My net rental income after including CCA is nil.
- Original purchase date of property January 2014.

Questions:
1. Can you confirm being a foreign residential property for US filing, the depreciation is taken over 30 years (and not 40 years). I think previously it was 40 years (Source I came across: https://www.goldinglawyers.com/deprecia ... uidelines/)

2. In Canada, being a rental property, this will fall in Class 1 of CCA i.e. 4% is that correct? (Source: https://www.canada.ca/content/dam/cra-a ... 36-19e.pdf)

3. I do plan to return back to Canada. With the change in use from personal to rental on June 2019, I report capital gains, but being my personal property, I can take capital gain exemption. However, when I move back to Canada, the property changes back from rental to personal, the guidance says: "When you change your rental property to a principal residence, you can elect to postpone reporting the disposition of your
property until you actually sell it. However, you cannot make this election if you, your spouse or common law partner, has deducted CCA on the property for any tax year after 1984, and on or before the day you change its use."

- What does that mean? If I take CCA on Canada side to match US, once I move into the property again, does that mean I need to show recapture? Just trying to understand that piece better.

Any guidance will be highly appreciated.

Regards,
S

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