Recapture

Plain meaning

An income inclusion that can arise when depreciable property is sold and prior capital cost allowance claims are effectively reversed.

Also called

Key points

• Capital cost allowance lets taxpayers deduct the cost of depreciable property over time within prescribed classes.
• If property is disposed of for more than the remaining undepreciated capital cost of the class, recapture may be included in income.
• Recapture is not the same as a capital gain; both can sometimes arise on the same disposition if proceeds exceed capital cost.
• Terminal losses can arise in some cases when a class is empty and undepreciated cost remains.
• The result depends on the CCA class, proceeds of disposition, capital cost, and other property remaining in the class.

Why it comes up

Recapture can affect business asset sales, rental properties, vehicle deductions, and real estate transactions.