Statement of Rental Income

Each Form T776 (TP-128), Statement of Real Estate Rentals, includes a section for calculating the CCA. The gross and net income on each statement are carried over to the Summary of Real Estate Properties (Jump Codes: RENTAL (T1) and QRENTAL (TP1)) and the comprehensive income is carried over to lines 12599 (gross) and 12600 (net) of the T1 return (lines 168 (gross) and 136 (net) of the TP1 return).

The description cell in the Summary updates the address of the rental property to that entered on the appropriate T776 (TP-128) form.

Amounts in boxes 107 and 110 of the T5013 slip (box 3 of the RL-15 slip) update the bottom of the Summary of Real Estate Rentals.

Enter the percentage of expenses that relates to a personal use of the rental property. The program will calculate the total deductible expenses net of the above percentage.

Where the rental property is held through co-ownership, proceed as follows:

• enter the gross income and the expenses computed for the property;
• enter the percentage of co-ownership held by the taxpayer in order to determine the taxpayer's share of net income (before CCA) on the appropriate line;
• calculate the CCA only on the share of the property held by the taxpayer;
• enter all required information with respect to the other co-owners in the appropriate section.

Where the rental property is operated by a partnership, proceed as follows:

• enter the gross income and the expenses computed for the property;
• calculate the CCA for the property;
• enter the percentage which corresponds to the participation held by the taxpayer in order to determine the taxpayer's share of net income on the appropriate line;
• enter all required information with respect to the other partners in the appropriate section.

Where the spouse holds a share in the real property, enter the percentage equivalent to the spouse's share in the real property in the section "Details of co-owners" and indicate that the rental statement is shared with the spouse in the section "Information required for the coupling process."

A transfer of data from the T776 form into the T1135 form can be made when the rental property is located outside Canada.

Note that no data is transferred if Part A, “Simplified reporting method,” has been completed in Form T1135.

In order for Taxprep to transfer the data, select the box Select this box to indicate that the rental property is located outside Canada in the “Foreign income” section. Then, select the box If this is a specified foreign property, select this box to transfer data relating to the property into Form T1135.

The undepreciated capital cost at the end of the year of all CCA classes and the adjusted cost base of the land linked to the T776 form, the address and the gross income are transferred to Section 5, “Real property outside Canada (other than personal use and real estate used in an active business).”

When the rental property is operated by a partnership, Taxprep transfers the undepreciated capital cost at the end of the year of all CCA classes linked to Form T776 and the adjusted cost base of the land based on the taxpayer’s share in the partnership.

When the rental property is held through co-ownership, Taxprep does not transfer the undepreciated capital cost at the end of the year of all CCA classes linked to Form T776 and the adjusted cost base of the land based on the taxpayer’s share, because these amounts should already correspond to the taxpayer’s share.

For more information, consult the Help for Form T1135.

The program restricts CCA claims to the total of net rental income/loss including the recapture, where applicable.

Where the CCA is restricted, the program does not necessarily optimize the CCA claim. The program reduces the CCA according to the order in which the property has been entered, but you can elect to first depreciate classes other than building classes 1, 1.2, 1.3, 3 and 6 by selecting the function Sort by putting classes 1, 3 and 6 at the end to depreciate them last. This way, the program will calculate the depreciation on all classes other than building classes, and will then calculate these classes to reduce the net income.

The program offers two options to default the CCA to zero:

1- the check box Default to zero CCA claim for all classes; and

2- the check box Default to zero CCA claim only for buildings in class 1, 3 and 6.

Each rental building acquired after 1971 costing $50,000 or more must be shown as a separate CCA class.

The Form TP-1086.R.23.12, Statement of Costs Incurred Respecting Work Carried Out on an Immoveable must be completed when renovation, improvement, maintenance or repair work is carried out with respect to any property used to carry on a business or to earn rental income.