RENTAL INCOME - DISPOSITION OF REAL ESTATEIf you have disposed of rental property in the tax year, please follow the steps below:
1. On the "Left-side menu of the Interview tab", select the "CRA Questions" section.
2. On the page that appears, go to line " Did you sell a principal residence in 2021 ".
3. If you answer "Yes", the "Capital gains (or losses) and ABIL" section will be generated in the "Interview setup".
4. Then on the "Interview setup", on the screen to the right, go to the "Rental income" group, check the box for "Rental property income", and click "Next" at the bottom of this page.
5. On the "Interview setup", click on "Rental property income", and on the new page that appears to the right, select "T776 - Rental income property".
6. A page will appear on your right, entitled "T776 - Rental property identification". Complete this page. You must specify the exact date of the sale of the building, which corresponds to the end of the fiscal year of this rental property, and, once the relevant information is entered, click "Next" at the bottom of this page.
7. On the "Rental property income and expenses" page that appears on your right. Remember to check the box indicating that this is the final year of operation. Subsequently, enter the income and expenses.
8. On the "Left-side menu of the Interview tab", under "Rental Income", click on "CCA". You must choose the depreciation category that corresponds to the rental property. By clicking on the category selected, a new page is generated on the right. You must complete it properly, by making sure to indicate the date of acquisition of the property, and by entering the amount in the field for "Opening balance of the undepreciated capital cost". To do so, enter the original acquisition cost, plus the capital additions made over the years, minus the total depreciation you have taken, if applicable.
9. For "Did you dispose of an asset in this class" -Select Yes. Enter the amount for "Proceeds of disposition of an asset", meaning the proceeds from the sale of the building as well as the "ACB of the disposition", that is, the original value plus the capital additions minus the depreciation that you have claimed over the years.
10. In the field for "Description and amount of expenses associated with the disposition of assets", enter the expenses incurred for the sale of the building.
11. In the field for "Calculate the capital gain and carry the result on Schedule 3", choose "Calculate capital gain" from the drop-down menu. If you have a capital gain, the amount minus the expenses incurred for the sale of the building will be entered by the program on federal Schedule 3 and on Quebec Schedule G.
12. Under the sub-heading "CCA" also select the following Class of property "Land - non-depreciable property" located at the bottom of the page.
13. You must enter all relevant information.
Do not forget to specify whether you have liquidated all the assets of this category on the line provided for that purpose, in both pages that you have completed for the property as well as for the land.
However, federal Schedule 3, as well as Quebec Schedule G if applicable, will be generated to indicate the capital gain (or loss).
For more information regarding rental income, please consult the following CRA links:
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4036.html
ID: 20220221111642DEX.xml
Webpage: KPA320-20220221111642DE.htm