Canada Revenue Agency
www.cra.gc.ca
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Changing from personal to rental use
If you bought a property for personal use and then started using it in your rental operation in the current tax year, there is a change in use. You need to determine the capital cost of the property for rental purposes.
If the fair market value (FMV) of a depreciable property (such as equipment or a building) is less than its original cost when you change its use, the amount you put in Column 3: Cost of additions in the year of either Area B or Area C is the FMV of the property (do not include the land, if the property includes land and a building).
If the FMV is more than the original cost of the property when you change use, use the following chart to determine the amount to enter in Column 3, of Area B or C.
Capital cost calculation (Change in use)
| 1. Actual cost of the property | $ 1 | |||
| 2. FMV of the property | $ 2 | |||
| 3. Amount from line 1 | − | 3 | ||
| 4. Line 2 minus line 3 (if negative, enter "0") |
= | $ 4 | ||
| 5. Enter any capital gains deduction claimed for the amount on line 4* $ × 2 |
 − |
5 | ||
| 6. Line 4 minus line 5 (if negative, enter "0") |
= | $ × 1/2 | + |
6 |
| 7. Capital cost: line 1 plus line 6 | = | $ 7 | ||
* Enter only the amount that relates to the depreciable property.
Note
We consider you to have acquired the land for an amount equal to the FMV when you changed its use. Enter this amount on line 9923 in Area F of Form T776, Statement of Real Estate Rentals.
