I recently sold a rental property (condo) for a profit. I owned it for 6 years, lived for the first two, then rented it out for next 4 years. I never claimed depreciation allowance—stupid me.
Am I subject to depreciation allowance recapture (add the depreciation amount to the sale price for tax calculation) even if I never claimed it?
In Canada, you have the option of claiming depreciation expense, called capital cost allowance (CCA), it is not required. At time of sale, any CCA that you have claimed is recaptured and taxed as regular income (so long as sale price is >= to your original purchase price). If you elected not to claim CCA, you are not subject to recapture.
So you missed out on some tax savings over 6-years, but you'll have less tax burden due to the sale. If your tax rate has stayed the same for the duration, the only loss you face is due to the value of those dollars you could have saved over the years being lower than the value of the dollars you'll save now.
There's a good article on capital cost allowance by The Blunt Bean Counter .
