In order to claim your capital expenses you will be required to claim CCA at the end of your fiscal year.

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What is CCA?

Capital Cost Allowance is an optional depreciation at the end of the year that covers the unrealized loss of value (depreciation) of an asset. There are many different assets (that fall into classes) that you can claim. Ie. your house (not the land), new fridge, dishwasher, computer, your vehicle, etc.

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Should you claim CCA?

It is a good way to shelter some tax while you are growing your portfolio. If you have high income during the years of increasing your portfolio it might be a good idea to shelter some tax and pay it later on when your income isn't as high when you decide to sell off your properties.

You claim it annually. You can skip a year if you want.

Note: You will have to pay the tax saved when you sell your property if you've claimed CCA.

 

Classes of CCA

There are certain classes of CCA for deducting the expense.

1 - 4% - Most Buildings

10 / 10.1 - 30% - Vehicles

12 - 100% - Tools, etc.

38 - 30% - Equipment, trailers, excavators, etc.

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You can find a detailed list on the Canada website.

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