owns several small apartment buildings

Hi David,


I had a phone appointment with you in June regarding an apartment building I was purchasing in xxxxxx, xxxxxxx. The call was short, about 20 minutes, and you told me I could contact you again if I had any further questions. I don’t expect you remember me, but we also spoke at some length about autism (I have a young autistic son) and you suggested a therapy by a friend of yours in Vancouver which I am looking into.


My questions relate to the apartment building:


1)       I purchased it in xxxxxx (8 units) and am wondering how I claim the appraisal fee, the building inspection fee and the lawyers fee on my tax return.  

2)       How do I calculate CCA and is it beneficial to claim CCA each year?

3)       How is CCA treated when I sell the building?


I am just about to close on another building in xxxxxxx (4 units) in 2 days. This brings me to a total of 12 units. I am looking to buy 2 more buildings bringing the total to 18 – 20 units, in 4 separate buildings. The rental income covers all mortgages and expenses, and also produces an income for me each month, presently $500 increasing to $1000 with the purchase of the additional buildings.


I do not want to become a corporation or a business. I am concerned that CCRA will insist I am a corporation or a business because I will have up to 20 units in 4 separate buildings. How do you see my situation?


            The income I make each month from the buildings is added to my support payments and helps with our living expenses.


      Your advice is appreciated. If you want more details I can call you or email. Thank you.





david ingram replies:

1.  The appraisal, legal, trips to xxxxxxxxxxxx to buy and building inspection fees are NOT deductible on your return.  They are all added to the cost of the building and may be depreciated over the years at 4% per year on the diminishing balance.
    In the first year, the figure is 2%. 

2.    Partially answered in '1' above.  In addition, the depreciation figure which is called Capital Cost Allowance on the return can not beused to create a rental loss.  Thereofe, if there was an amount of $6,000 to use as depreciation and your profit was only $3,217.55, you could  only claim depreciation of $3,217.55. You should go to a CRA office and get hold of the renter's guide.  It has the T776 form and the method of claiming CCA.

3.   When you sell the building, the CCA is added back into the rental schedule and you have to pay tax on it at that time.  When you sell, it is important to keep enough out to pay the tax if you are using the money to buy another building. 

The CRA will NEVER call or deem you to be a corporation if you have not physivcally incorporated.  In general, I do not think anyone in your position should be incorporated.

I am happy that the school is helping your son.  An autistic child is a total life situation.  I took someone down to Paul Swingle's yesterday.  A suicidal woman who walked in crying and weeping and walked out laughing with her sound health device and detailed instructions which did not involve any drugs.  While there, the Koreamn lady whe was attacked and left in a coma in Stanley Park was wheeled out.  She ws laughing and apparently is now painting, etc.

This was the lady who was considered to be a living vegetable.

You can see that story including the Swingle treatment at:


david ingram �