Depreciable property

When you dispose of depreciable property, you may have a capital gain. In addition, certain rules on capital cost allowance (CCA) may require that you add a recapture of CCA to your income or allow you to claim a terminal loss.

Capital Gain

Usually, you will have a capital gain on depreciable property if you sell it for more than its adjusted cost base plus the outlays and expenses incurred to sell the property.


A loss from the sale of depreciable property is not considered to be a capital loss. However, you may be able to claim a terminal loss.

Recapture of CCA and terminal losses

This section will provide you with a general look at the rules of the recapture of CCA and terminal losses.


These rules do not apply to passenger vehicles in Class 10.1.

When you sell a depreciable property for less than its original capital cost, but for more than the undepreciated capital cost (UCC) in its class, you do not have a capital gain.

Generally, the UCC of a class is the total capital cost of all the properties of the class minus the CCA you claimed in previous years. If you sell depreciable property in a year, you also have to subtract from the UCC one of the following amounts, whichever is less:

  • the proceeds of disposition of the property minus the related outlays and expenses
  • the capital cost of the property

If the UCC of a class has a negative balance at the end of the year, this amount is considered to be a recapture of CCA. Include this recapture in your income for the year of sale.

If the UCC of a class has a positive balance at the end of the year, and you do not have any properties left in that class, this amount is a terminal loss. Unlike a capital loss, you can deduct the full amount of the terminal loss from your income in that year.

If the balance for the UCC of a class is zero at the end of the year, then you do not have a recapture of CCA or a terminal loss.

See example that shows the calculation of recapture or terminal loss.

Completing your Schedule 3

When you dispose of property included in CCA Class 14.1, you may qualify to make an election to treat the disposition as a capital gain, which you would report on lines 13599 and 13800 of Schedule 3.  For more information, see Disposing of property included in capital cost allowance Class 14.1.

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