Personal use of property

If you buy property for both business and personal use, you can show the business part of the property in Area B or Area C of Form T2125, Statement of Business or Professional Activities, in two ways:

• If your business use stays the same from year to year, enter in Area B or Area C the total cost of the property in column 3, the personal part in column 4, and the business portion in column 5. Enter in column 3 of Area A the amount from column 5 to calculate the capital cost allowance (CCA) you can claim.
• If your business use changes from year to year, enter in Area B or Area C the total cost of the property in column 3 and column 5, and enter “0” in column 4. Enter in column 3 of Area A the amount from column 5 of Area B or Area C and calculate the CCA amount (business and personal) in column 9. The amount in column 10 (UCC at the end of the year) is equal to the amount in column 5 minus the amount in column 9. When you claim CCA on Form T2125, you have to calculate the allowable part of the column 9 amount based on your business use.

The CCA calculated for the business use of a work space in your home in Area A of Form T2125 must be reported on the chart "Calculation of business-use-of-home expenses" on page 3 of the form. This CCA must be subtracted from the total amount of the CCA for the year calculated in Area A and must not be included on line 9936 in Part 5 on page 2 of Form T2125.

Example
Jeremy owns a financial consulting business. He bought a car in 2009 for personal and business use. The car cost $20,000, including all charges and taxes. Therefore, he includes the car in Class 10. His business use this year was 12,000 kilometres of the total 18,000 kilometres driven. He calculates his CCA on the car for 2009 as follows:

He enters $20,000 in column 3 and column 5 of Area B. Jeremy also enters $20,000 in column 3 of Area A. By completing the other columns in the chart, he calculates a CCA claim of $3,000. Because Jeremy used his car partly for personal use, he calculates his CCA claim as follows:

( 12,000 (business kilometres) ÷ 18,000 (total kilometres) ) × $3,000 = $2,000

Jeremy enters $2,000 on line 9936 on his Form T2125.

Note
The capital cost limits on a Class 10.1 vehicle (a passenger vehicle) still apply when you split the capital cost between business and pesonal use.

Changing from personal to business use

If you bought a property for personal use and started using it in your business in your current fiscal period, there is a change in use. You need to determine the capital cost for business purposes.

The fair market value (FMV) of a depreciable property is less than its original cost when you change its use, the amount you put in column 3 of Area B or Area C is the FMV of the property (excluding the land value if the property is land and a building). If the FMV is more than the original cost of the property (excluding the land value if the property is land and a building) when you change use, use the following chart to determine the amount to enter in column 3 of Area B or Area C.

When you start to use your property for business use, you are considered to have disposed of it. If the FMV of the property is greater than its cost, you may have a capital gain.

Note
We consider that you acquire the land for an amount equal to its FMV when you change its use. Include this amount on line 9923, "Total cost of all land additions in the year", in Area F.

Forms and publications

• Guide T4002, Business and Professional Income
• Form T2125, Statement of Business or Professional Activities

Related topics

• Class 10 (30%)
• Class 10.1 (30%)
• Line 127 - Capital gains
• Line 9936 - Capital cost allowance