Changing from personal to rental use

If you bought a property for personal use and then changed the use to a rental in your rental operation in the current tax year, there is a change in use of the property. You need to determine the capital cost of the property at the moment of this change.

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 of Area B or C is the FMV of the property (excluding the land value 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.

Capital cost calculation (change in use)

Forms and publications

• Guide T4036, Rental Income
• Form T776, Statement of Real Estate Rentals

Related links

• Area B – Equipment additions in the year
• Area C – Building additions in the year
  
• Area F – Land additions and dispositions in the year
• Column 3 – Cost of additions in the year