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Claiming CCA on a business-use portion of a residence

Expert: John R Mott

Brenda asked:

If you have claimed CCA on a business-use portion of a residence, is it possible to reverse that for tax purposes to rectify the capital gains issue? Eg, submit a revised tax return?

John R Mott answered:

The Canada Revenue Agency will not normally permit a taxpayer to amend CCA deductions in previous tax years if the amendment would change taxable income.

However, even if you were permitted to reverse the CCA claims, this may not achieve the desired result. If the business use portion of the property was self-contained and represented more than a negligible allocation of total space, then you may be considered to have two distinct properties for tax purposes: a residential property and a business property.

The principal residence exemption will not be applicable to the capital gain attributable to the business property.

About the author

John Mott is a chartered accountant and tax specialist with a private practice in mid-town Toronto. He provides tax, accounting and advisory services to individuals and small businesses. He may be visited online at:

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