Client has a disposition of rental property which has been shared 50/50 with spouse. I understand how to record the disposition on the T776 but when i go to the S3M to share the capital gain 50/50 with the wife i cannot input 50%. The S3M will not allow me to type anything. Any suggestions would be appreciated. Thank you in advance for sharing your knowledge.
Each taxpayer should record their proper costs of depreciable and non-depreciable property. Be on the lookout for any CCA recapture issues on depreciable property. especially. Probably a spreadsheet over the ownership life may also assist to organize to assist in ascertaining if all supporting documentation is available over the years.
If you showed the entire Proceeds of Disposition in the T776 Asset Manager under Current Year Addition/Disposition Transactions then any gain should flow to the S3M.
If you have your T776 set up as a “Partnership” in Part 2 of the T776 then TaxCycle will take 50% of the Proceeds and ACB and put those same figures on each spouse’s T1 return. In this case each spouse gets allocated their share of the disposition.
If you have your T776 set up as a “co-ownership” in Part 2 of the T776 then TaxCycle will assume that each co-owner has their own separate CCA Schedule, and only their proportional share of assets acquired and assets disposed of would have been added to and removed from their T776Asset Manager.
If your T776 was set up as co-ownership then you need to enter 50% of the disposal on each of the T1 returns separately. If the T776 was set up as a partnership then the software should automatically allocate 50% of the sale proceeds to each partner’s S3. Even though the S3M shows 100%, the proceeds and acb data on that schedule should reflect each partner’s 50% share.
Thank you! I changed the ownership from Co-owner to Partnership and it worked perfectly. I appreciate that you took the time to share your knowledge.
If you changed the co-owner to partnership and it worked for this year, I would go back to the prior years and see that the CCA claims are correct for both owners. They should be the same for ALL years.
This is a typical error when the ownership of a rental is incorrected recorded as co-owner.