Hi! Can somebody help me in figuring out the terminal loss on a rental property. Client had three separate rental properties (different addresses and provinces) for which 3 separate T776 were filled out. In 2022, she disposed of one of them at a $200K loss. The question is: Can she claim the terminal loss in 2022? My confusion is with CRA’s terminology in that a terminal loss is allowed only when there is no further assets in the class. The other 2 properties are in a same class but on their own T776. Called CRA multiple times and got read the “last asset in the class rule” several times without actually addressing my specific question :(.
Have you allocated the proceeds (and therefore the loss) between land and building? I believe Reg 1101 requires that each building with a cost more than $50K be setup in a separate class for CCA purposes. This makes figuring out any terminal loss easier. You won’t be able to claim a capital loss on the building.
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https://laws-lois.justice.gc.ca/eng/regulations/C.R.C.,_c._945/section-1101-20150529.html Ha! It totally makes sense! I knew that it made no sense to carry a loss on a rental until all are disposed! Thank you Kevin for the guidance! I will allocate the proceeds between land and building, and it will still be above the $50k threshold. I understand that there is not capital loss on the building (will claim the terminal loss), and will see how the land plays out based on the values assigned (perhaps capital loss or gain).
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