By Jason Heath, CFP on March 9, 2026 Estimated reading time: 4 minutes

Should you claim capital cost allowance on a rental property?

By Jason Heath, CFP on March 9, 2026 Estimated reading time: 4 minutes

Rental property investors need to report their annual income and expenses on their tax return. You must also track your adjusted cost base (ACB), which may increase over time with renovations to determine the eventual capital gain when you sell. 

There are related tax concepts called undepreciated capital cost (UCC) and capital cost allowance (CCA) that are important to understand. 

The Canada Revenue Agency (CRA) defines the capital cost of an asset very simply as “what you pay for it. Capital cost also includes items such as delivery charges, the GST and PST, or the HST.”

In the case of a rental property, it may also include acquisition costs like legal fees or land transfer tax. 

Undepreciated capital cost (UCC) “is the balance of the capital cost left for further depreciation at any given time. The amount of CCA you claim each year will lower the UCC of the property.” 

CCA is depreciation you claim on an asset. In the case of a rental property, you can claim CCA on a building but not on land. This depreciation is a percentage of the undepreciated capital cost that can be........

© MoneySense