What CCA rate applies to purpose-built rental construction in Canada?

New residential purpose-built rental construction is Class 1 at 4% declining balance. New commercial construction is Class 1(a.1) at 6%. First-year enhancements under the Accelerated Investment Incentive (AII) apply to acquisitions between November 21, 2018 and the 2030 phase-out, and the 2024 Purpose-Built Rental Housing measure raises the Class 1 CCA rate to 10% (from the standard 4%) for eligible new residential rental buildings meeting the four-unit test, where construction begins between April 16, 2024 and December 31, 2030.

2024 Purpose-Built Rental Housing (PBRH) accelerated CCA. Available for a newly-constructed residential rental building that (a) contains at least four private apartment units OR at least ten private rooms/suites, (b) has at least 90% of residential units used for long-term rental, (c) construction begins on or after April 16, 2024, and (d) is available for use before January 1, 2036. Class 1(q) allowance is 10% CCA in the year the building becomes available for use, and that 10% rate is itself the PBRH enhancement, replacing the standard 4% — it is an accelerated rate, not a write-off. Because eligible property also benefits from the reaccelerated investment incentive (RII) for property acquired after 2024, the half-year rule is suspended and the first-year claim is 1.5 × 10% = 15%.

Example: an Ontario developer completes a 12-unit purpose-built rental building on August 1, 2026 with a $6,000,000 building cost (excluding land). Under PBRH, the developer claims $900,000 CCA in fiscal 2026 (15% first-year: 1.5 × the 10% PBRH rate, with the half-year rule suspended under the RII), materially reducing rental income for the year. The remaining $5,100,000 of undepreciated capital cost is deducted at 10% declining balance in later years.

Commercial or mixed-use construction remains at the 4%/6% Class 1 rates, subject to AII 1.5x uplift on first-year CCA (reinstated in full for property acquired on or after January 1, 2025: the 1.5x uplift applies to property available for use before 2030, then phases out over 2030-2033).

Note: The PBRH accelerated CCA does not apply to substantial-renovation projects, addition-of-units to existing buildings, or short-term rentals. Confirm the four-unit and 90%-long-term tests before relying on the PBRH accelerated rate.

Source: canada.ca — Purpose-built rental housing accelerated CCA

— Bader A. Chowdry, CPA, CA, LPA — Insight Accounting CPA

Disclaimer: Bader A. Chowdry, CPA, CA, LPA is a Licensed Public Accountant regulated by CPA Ontario. Insight Accounting CPA Professional Corporation is a Chartered Professional Accountant firm. This content is general information only and does not constitute professional advice for your specific facts. Confirm current rules and figures with your own advisor before acting.