Tax · Rental property

Rental property CCA schedule (Class 1).

Capital cost allowance is the depreciation CRA lets you claim on a rental building (never the land). Most buildings bought after 1987 are Class 1 at 4% on a declining balance.

Year 1 CCA is usually half of 4% of the building cost (the half-year rule); after that it is 4% of the remaining UCC. You cannot use CCA to create or increase a rental loss, and if you sell above the remaining UCC the difference is recapture, added to income.

Class 1 = 4%Recapture & terminal lossCRA guide T4036

Inputs

Purchase

Purchase price (plus eligible closing costs)

Include legal fees and other costs split between land and building.

Part of that price that is land

Land is not depreciable. Use the property tax assessment split or an appraisal.

CCA rate

Apply the half-year rule in year 1Untick if an enhanced first-year allowance (such as the Accelerated Investment Incentive) applies to your property; this tool does not model it.

Projection

Years to show1 to 40.

Net rental income before CCA, per year

Optional. If filled in, each year’s claim is capped at this amount so CCA never creates a loss.

Sale price of the building at the end of the last year

Optional. Building share only, after selling costs.

Result

Enter the purchase details, then press Calculate.

How rental CCA works

Land is not depreciable. Only the building’s cost goes in the class; closing costs such as legal fees are split between land and building in proportion to their values.

Declining balance. CCA for a year is the class rate times the undepreciated capital cost (UCC) at the start of the year. In the year you acquire the property you can usually claim CCA on only one-half of your net additions to the class (the half-year rule).

No loss from CCA. CRA: “You cannot use CCA to create or increase a rental loss.” Enter your yearly net rent before CCA to see the capped claim.

On a sale. If the proceeds (up to the original cost) exceed the UCC, the excess is recapture and is added to your rental income. If the building is sold for less than its UCC and nothing is left in the class, the shortfall is a terminal loss, usually deductible from rental income. Proceeds above the original cost are a capital gain, of which 50% is taxable. This tool assumes one building in the class.

Your own home. If you rent part of your principal residence, CRA says the minor-income-use exception to splitting the home for the principal residence exemption requires that “no capital cost allowance (CCA) is claimed on the property.” See the basement apartment tax calculator before claiming CCA there.

Sources, retrieved October 2026: CRA guide T4036, Rental Income; CRA guide T4037, Capital Gains (inclusion rate of 1/2).

Frequently asked questions

What is CCA class 1 for rental property?

Class 1 covers most buildings acquired after 1987 and has a 4% declining-balance rate. Certain older buildings are Class 3 at 5%, and some non-residential buildings qualify for extra allowances.

Do I have to claim CCA on my rental?

No, CCA is optional and you may claim any amount up to the maximum. Some owners claim less than the maximum or none, because any recapture is added to income when the property is sold.

What is recapture?

When you sell a building for more than its remaining UCC (up to its original cost), the excess over UCC is added to your income in the year of sale.

Why is land excluded?

Land is not depreciable property, so only the building portion of the price is added to the CCA class.

Estimate only

Estimate only. Assumes one building in the class, ignores the Accelerated Investment Incentive and other enhanced allowances, and excludes selling costs, the principal residence exemption and the tax rate on recapture. Confirm the class and amounts with CRA guide T4036 or a tax professional.