What is CCA depreciation in Canada?

Capital Cost Allowance (CCA) is the Canadian tax method for depreciating capital assets. It lets you deduct a portion of assets like vehicles, equipment, and buildings over time, reducing taxable business or rental income.

How is CCA calculated in Canada?

CCA is calculated by multiplying the undepreciated capital cost (UCC) by the class rate. The half-year rule means you can only claim half the normal rate in the year of purchase.

Can you claim CCA on a rental property?

Yes, you can claim CCA on rental properties (Class 1, 4% rate), but it only offsets rental income. Claiming CCA reduces the cost base and may result in recapture when you sell.

Should I claim CCA on my rental property?

Generally not recommended unless you have significant rental income to offset and plan to hold long-term. CCA reduces your cost base, so when you sell, the recaptured CCA is taxed as regular income (not capital gains). If you sell for a gain, the CCA recapture is taxed at your full marginal rate — potentially 40–50%. Many accountants advise against claiming CCA on rental property unless you need the deduction strategically in a high-income year.

What is the Accelerated Investment Incentive for CCA?

The Accelerated Investment Incentive (ACII) allows a first-year CCA deduction of up to 1.5 times the normal rate, effectively replacing the half-year rule with a more generous deduction. For Class 10 assets (30% rate), the first-year deduction is 45% instead of the usual 15% (half of 30%). This incentive applies to assets acquired after November 20, 2018 and is being phased out gradually starting 2024.

CCA Depreciation Calculator Canada 2026: Classes, Rates & Half-Year Rule

Common CCA Classes

Class	Rate	Assets
Class 1	4%	Buildings (brick, concrete)
Class 3	5%	Buildings (pre-1988)
Class 6	10%	Frame buildings, fences
Class 8	20%	Office furniture, equipment
Class 10	30%	Vehicles, computer hardware
Class 10.1	30%	Passenger vehicles ($37,000+ limit)
Class 12	100%	Tools <$500, software
Class 14.1	5%	Goodwill, patents
Class 43	30%	Manufacturing equipment
Class 50	55%	Computer equipment (after 2011)
Class 53	50%	Manufacturing property
Class 54	30%	Zero-emission vehicles (up to $61K)

CCA Calculation Method

Declining Balance Method

CCA Claim = UCC × Rate × (Days Owned ÷ 365)

Half-Year Rule

In the year an asset is acquired, only 50% of the normal CCA can be claimed.

Example Calculation

Year	UCC Start	CCA Rate	CCA Claim	UCC End
1	$50,000	30% × 50%	$7,500	$42,500
2	$42,500	30%	$12,750	$29,750
3	$29,750	30%	$8,925	$20,825
4	$20,825	30%	$6,248	$14,577
5	$14,577	30%	$4,373	$10,204

Vehicle CCA (Class 10/10.1)

Passenger Vehicle Limits (2025)

Type	Maximum CCA Cost
Class 10.1 vehicle	$37,000 + tax
Zero-emission (Class 54)	$61,000 + tax

Vehicle CCA Example

Year	UCC	CCA (30%)	Half-Year?
1	$37,000	$5,550	Yes (50%)
2	$31,450	$9,435	No
3	$22,015	$6,605	No
4	$15,410	$4,623	No
5	$10,787	$3,236	No

Zero-Emission Vehicles (Class 54)

Feature	Details
Rate	30% declining balance
Enhanced first year	Up to 100% in year 1
Cost limit	$61,000 (2025)
Includes	EVs, plug-in hybrids

Building CCA

Rental Property (Class 1)

Input	Value
Building cost	$400,000
Land (not depreciable)	$200,000
CCA rate	4%

Year	UCC	CCA (4%)	Half-Year?
1	$400,000	$8,000	Yes
2	$392,000	$15,680	No
3	$376,320	$15,053	No
4	$361,267	$14,451	No
5	$346,816	$13,873	No

CCA Recapture on Sale

Scenario	Tax Result
Sell above UCC	Recapture (taxed as income)
Sell below UCC	Terminal loss (deduction)
Sell above original cost	Capital gain + recapture

Example Recapture

Item	Amount
Original cost	$400,000
CCA claimed	$50,000
UCC	$350,000
Sold for	$500,000
Recapture	$50,000 (taxable)
Capital gain	$100,000 (50% taxable)

Computer Equipment (Class 50)

Enhanced Rate

Class	Rate	Equipment
Class 50	55%	Computers after March 2011

Example

Year	UCC	CCA	Half-Year?
1	$5,000	$1,375	Yes
2	$3,625	$1,994	No
3	$1,631	$897	No
4	$734	$404	No

Computer equipment essentially written off in ~4 years.

Office Furniture & Equipment (Class 8)

20% Rate

Year	UCC	CCA
1	$10,000	$1,000 (half-year)
2	$9,000	$1,800
3	$7,200	$1,440
4	$5,760	$1,152
5	$4,608	$922

Immediate Expensing Rules

Accelerated Investment Incentive

Rule	Details
Eligible property	Most CCA classes
Enhanced first year	Up to 1.5× normal rate
DIEP limit	$1.5 million per year
Applies	CCPCs and unincorporated businesses

Example Enhanced CCA

Standard	Enhanced
30% × 50% = 15%	Up to 45%+ in year 1

CCA for Rentals

Rules

Rule	Details
CCA cannot create loss	Only reduces income to $0
Separate class rule	Each rental property separate (usually)
Recapture on sale	CCA claimed is recaptured

Should You Claim CCA?

Scenario	Recommendation
Property appreciating	Maybe defer CCA
Plan to sell soon	Avoid CCA (recapture)
High rental income	Claim CCA
Low marginal rate now	Defer to higher rate years
Never selling	Claim CCA

Multi-Asset Classes

Grouping Assets

Rule	Details
Same class	Assets pooled together
Different classes	Separate UCC pools
Disposition	Reduces pool by proceeds
Addition	Increases pool by cost

Example Pool

Action	Class 8 UCC
Opening	$20,000
Purchase desk ($2,000)	$22,000
Sell chair ($500)	$21,500
CCA (20%)	$4,300
Closing UCC	$17,200

CCA for Self-Employed

Common Claims

Asset	Class	Rate
Vehicle	10/10.1	30%
Computer	50	55%
Office furniture	8	20%
Software	12	100%
Phone/tablet	50	55%

Home Office Building

Rule	Details
CCA on home	Can claim business %
Risk	May affect principal residence exemption
Alternative	Claim expenses only (no CCA)

Terminal Loss

When No Assets Remain

If you sell your last asset in a class for less than UCC:

Scenario	Result
UCC remaining	$15,000
Sold last asset for	$10,000
Terminal loss	$5,000 (deductible)

CCA Claim Decisions

When to Maximize CCA

Situation	Strategy
High income year	Claim full CCA
Business profitable	Reduce taxable income
Not selling soon	Build deductions

When to Defer CCA

Situation	Strategy
Low income year	Save for later
Planning to sell	Avoid recapture
Low marginal rate	Wait for higher bracket

Record Keeping

Required Documentation

Document	Purpose
Purchase receipts	Original cost
Date acquired	Half-year rule
CCA schedule	Track UCC yearly
Disposition records	Calculate recapture
Allocation (buildings)	Land vs. building split