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 for 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 depreciable property class is the total capital cost of all the properties of the class, minus the total 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:

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.

Forms and publications

The following guides contain information about CCA and how to report a recapture of CCA or a terminal loss:

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